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. $$\begin{array} { | l | l | l | } \hline & \text { Healthcare Division } &{ \begin{array} { c } \text { Pharmaceutical } \\\text { Division }\end{array} } \\\hline \text { Net sales } & \$ 160,000 & \$ 1,750,000 \\\hline \text { Operating income } & \$ 46,000 & \$ 218,000 \\\hline \text { Average assets } & \$ 320,000 & \$ 5,540,000 \\\hline \text { Target rate of return } & 12,0 \% & 12,0 \% \\\hline\end{array}$$ Calculate the residual income for the Healthcare Division.

A) $26,800
B) $7600
C) $114,000
D) $46,000