Question: 14 Meade Corp has the following operating data for the past 2 years: Return on Investment Residual Income Required Rate of return Sales Asset Turnover

14 Meade Corp has the following operating data for the past 2 years: Return on Investment Residual Income Required Rate of return Sales Asset Turnover Year Year 2 20% ? $25,000 10% $400,000 $500,000 10% 8% The sales margin in year 2 is twice the margin for the first year. The Company had the same asset turnover in both years. What is the residual income in year l? A. $4,000 B. $8,000 C. S10,000 D. S12,000 E. None of the above

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