Dallas Products is a division of a major corporation. The following data are for the most recent year of operations: Sales $ 37,080,000 Net operating income $ 3,108,960 Average operating assets $ 8,600,000 The company's minimum required rate of return 16 % The division's residual income is closest to:

1,732,960

Explanation:

The sales is $37,080,000

The net operating income is $3,108,960

The average operationg assets is $8,600,000

The required rate of return is 16%

The divisional residual income can be calculated as follows

= 3,108,960-(16/100×8,600,000)

= 3,108,960 - (0.16×8,600,000)

= 3,108,960-1,376,000

= 1,732,960

Hence the residual income is closest to $1,732,960

opportunity costs; reservation price.

Explanation:

It should be noted that when prices are low, consumers would actually want to buy more of the goods while the producers will want to sell less and only wants to sell more and supply more when price rises.

In order to calculate producer surplus, sellers must understand their direct costs and their opportunity costs because during production, the explicit and implicit cost are borne by the producer and the implicit cost has ti do with what the producer gives up during production process, so it must be taken into consideration.

Consumers must consider their reservation price based on the value they place on a particular good or service. The reservation price is the maximum amount that a consumer wan to pay for a good and once the reservation price is higher than the price of the good, the consumer will buy such good.