Compute the Residual Income for the Hi Ho Investment Center

Multiple Choice

Compute the residual income for the Hi Ho investment center as shown below. $\begin{array}{|l|r|}\hline {\text { Hi Ho Subsidiary }} \\\hline \text { Total sales } & \$ 20,000 \\\text { Operating income } & \$ 4,350 \\\text { Beginning assets invested } & \$ 14,000 \\\text { Ending assets invested } & \$ 16,000 \\\text { Average assets invested } & \$ ? \\\text { Desired ROI } & 25 \% \\\text { Residual income } & \$ ?\\\hline\end{array}$

A) $600
B) $3,100
C) $4,350
D) $1,850