Exhibit 11-2
Manford Inc -Refer to Exhibit 11-2

Multiple Choice

Exhibit 11-2
Manford Inc.has two divisions -Refrigerators and Dish Washer.
$\begin{array}{c}\text {Manford Company}\\\text {Segmented Income Statements}\\\text {For the Current Fiscal Year Ended December 31}\\\\\begin{array}{lcc}&\text { Refrigerator } & \text { Dish Washer } \\&\text { Division } & \text { Division } \\ \text { Sales } & \$ 10,000,000 & \$ 5,400,000 \\ \text { Cost of goods sold } & 4,200,000 & 2,660,000 \\ \text { Gross margin } & 5,800,000 & 2,740,000 \\ \text { Allocated overhead (from corporate) } & 940,000 & 740,000 \\ \text { Selling and administrative expenses } & 780,000 & 360,000 \\ \text { Operating income } & 4,080,000 & 1,640,000 \\\text { Income tax expense }(45 \%) & 1,836,000 & 738,000 \\ \text { Net income } & \$ 2.244,000 & \$ 902.000 \\\end{array}\end{array}$
-Refer to Exhibit 11-2.Assume the Dish Washer Division has average operating assets totaling $6,560,000 for the year and the company's cost of capital rate is 15 percent.What is the residual income for the Dish Washer division?

A) $656,000
B) $4,744,000
C) $246,000
D) $2,084,000
E) None of the answer choices is correct.