Residual income can be defined as:
multiple choice:
o income remaining after dividends are paid out.
o operating earnings minus return on investment.
o operating earnings plus a minimum acceptable return times average invested capital.
o operating earnings minus a minimum acceptable return times average invested capital.

Residual income

= Operating earnings - (minimum acceptable return x  average invested capital)

The correct answer is  D

Explanation:

Residual income is one of the measures of divisional performance. It si the excess of operating earnings over the product of minimum acceptable return and average invested capital.

urban company reports the following information regarding its production cost: units produced 37,000 units direct labor $ 30 per unit direct materials $ 35 per unit variable overhead $ 237,000 in total fixed overhead $ 127,000 in total