Managerial Accounting

Free Version

Upgrade subject to access all content


Calculating Residual Income: Rising Dawn Industries


Rising Dawn Industries manages an ambulance service providing transport and emergency care. Rising Dawn's investment information is as follows:

Average operating assets: \$650,000
Controllable margin (operating income): \$8,000
Contribution margin: \$10,000
Required minimum rate of return: 10%

What is Rising Dawn's Residual Income?