Residual Income The income from operations and the amount of invested assets in each division of Shiner Industries are as follows: Income from Operations Invested Assets Retail Division $82,800 $460,000 Commercial Division 58,000 290,000 Internet Division 37,800 270,000 Assume that management has established an 8% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $82,800 $58,000 $37,800 Minimum amount of income from operations fill in the blank 1 fill in the blank 2 fill in the blank 3 Residual income $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 b. Which division has the most residual income?
Residual Income The income from operations and the amount of invested assets in each division of Shiner Industries are as follows: Income from Operations Invested Assets Retail Division $82,800 $460,000 Commercial Division 58,000 290,000 Internet Division 37,800 270,000 Assume that management has established an 8% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $82,800 $58,000 $37,800 Minimum amount of income from operations fill in the blank 1 fill in the blank 2 fill in the blank 3 Residual income $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 b. Which division has the most residual income?
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 income from operations and the amount of invested assets in each division of Shiner Industries are as follows:
| Income from Operations |
Invested Assets |
|||
| Retail Division | $82,800 | $460,000 | ||
| Commercial Division | 58,000 | 290,000 | ||
| Internet Division | 37,800 | 270,000 |
Assume that management has established an 8% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
| Retail Division | Commercial Division | Internet Division | ||||
| Income from operations | $82,800 | $58,000 | $37,800 | |||
| Minimum amount of income from operations | fill in the blank 1 | fill in the blank 2 | fill in the blank 3 | |||
| Residual income | $fill in the blank 4 | $fill in the blank 5 | $fill in the blank 6 |
b. Which division has the most residual income?
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