Textbook Problem

Use the following information for Brief Exercises 11-19 through 11-21:

Barnard Manufacturing earned operating income last year as shown in the following income statement:

At the beginning of the year, the value of operating assets was $2,700,000. At the end of the year, the value of operating assets was $2,300,000.

Brief Exercise 11-20 Calculating Residual Income

Refer to the information for Barnard Manufacturing on the previous page. Barnard requires a minimum rate of return of 15%.

Required:

Calculate (1) average operating assets and (2) residual income.