6. Monfett Manufacturing earned operating income last year as shown in the following income
statement:
Sales
$620,000
Cost of goods sold
316,000
Gross margin
$304,000
Selling and administrative expense
219,000
Operating income
$ 85,000
Less: Income taxes (at 40%)
34,000
Net income
$ 51,000
At the beginning of the year, the value of operating assets was $263,000. At the end of the
year, the value of operating assets was $336,000. Monfett Manufacturing requires a
minimum rate of return of 15%. Total capital employed equal $350,000 and actual cost of
capital is 6%.
Required: Calculate the following:
A. (5 points) Residual income
B. (5 points) EVA
