Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $11,500,000 $13,500,000 $24,500,000 Average operating assets $2,875,000 $5,400,000 $4,375,000 Net operating income $517,500 $472,500 $661,500 Minimum required rate of return 14% 12% 14%

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

 

	Division A	Division B	Division C
Sales	$11,500,000	$13,500,000	$24,500,000
Average operating assets	$2,875,000	$5,400,000	$4,375,000
Net operating income	$517,500	$472,500	$661,500
Minimum required rate of return	14%	12%	14%

	Division A	Division B	Division C
Average operating assets	$2,875,000	$5,400,000	$4,375,000
Required rate of return	×14%	×12%	×14%
Minimum required return	$402,500	$648,000	$612,500
Actual net operating income	$517,500	$472,500	$661,500
Minimum required return (above)	18	648,000	612,500
Residual income	$115,000	$(175,500)	$49,000

Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to

Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year the company had net operating income of £410,000 on sales of £1,400,000. The company's average operating assets for the year were £1,600,000 and its minimum required rate of return was 11%. (The currency used in England is the pound, denoted by £.)

Required:

Compute the company's residual income for the year. (Omit the "£" sign in your response.)

 

Residual income

£

Explanation:

Average operating assets	£1,600,000
Net operating income	£410,000
Minimum required return: 11% × £ 1,600,000	176,000
Residual income	£234,000