Question: Allied Electronics has a particular division that generates $3,000,000 in sales and operating income of $250,000 on average operating assets of $1,250,000. The companys management

Allied Electronics has a particular division that generates $3,000,000 in sales and operating income of $250,000 on average operating assets of $1,250,000. The company’s management team has made it clear that division managers are expected to generate sufficient income to guarantee a minimum return of 10 percent.

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What is the division’s residual income?

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