Answer:
c.$760,000
Explanation:
The computation of the residual income is shown below:
= Operating income - minimum return
where,
Operating income equal to
= Sales - operating expenses
= $4,500,000 - $3,600,000
= $900,000
And, the minimum return equal to
= Invested asset amount × minimum rate of return
= $2,000,000 × 7%
= $140,000
Now put these values to the above formula
So, the value would equal to
= $900,000 - $140,000
= $760,000
