he operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating Income Invested Assets etail Division $9,600,000 $40,000,000 ommercial Division 12,100,000 55,000,000 nternet Division 6,480,000 36,000,000 ssume that management has established a 15% minimum acceptable return for invested assets.

Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 11E: The operating income and the amount of invested assets in each division of Conley Industries are as...
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Residual Income
The operating income and the amount of invested assets in each division of Conley Industries are as follows:
Operating Income
Invested Assets
Retail Division
$9,600,000
$40,000,000
Commercial Division
12,100,000
55,000,000
Internet Division
6,480,000
36,000,000
Assume that management has established a 15% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
Retail Division
Commercial Division
Internet Division
Operating income
$9,600,000
$12,100,000
$6,480,000
Minimum acceptable operating income as a percent of invested assets
Residual income
$4
$4
b. Which division has the most residual income?
Commercial Division
Feedhack
Transcribed Image Text:Residual Income The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating Income Invested Assets Retail Division $9,600,000 $40,000,000 Commercial Division 12,100,000 55,000,000 Internet Division 6,480,000 36,000,000 Assume that management has established a 15% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $9,600,000 $12,100,000 $6,480,000 Minimum acceptable operating income as a percent of invested assets Residual income $4 $4 b. Which division has the most residual income? Commercial Division Feedhack
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