Guardian Corporation Has Two Major Divisions- Healthcare Products and Pharmaceutical

Multiple Choice

Guardian Corporation has two major divisions- Healthcare Products and Pharmaceutical Products. It provides the following information for the year. $\begin{array}{|l|r|r|} \hline& \text { Healthcare Division } & \begin{array}{c}\text { Pharmaceutical } \\\text { Division }\end{array} \\\hline \text { Net sales } & \$ 150,000 & \$ 1,000,000 \\\hline \text { Operating income } & \$ 47,000 & \$ 218,400 \\\hline \text { Average assets } & \$ 310,000 & \$ 5,660,000 \\\hline \text { Target rate of return } & 13,0 \% & 13,0 \%\\\hline\end{array}$ Calculate the residual income for the Healthcare Division.

A) $27,500
B) $6700
C) $103,000
D) $47,000