The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $180,400 $820,000 Commercial Division 96,000 480,000 Internet Division 71,400 420,000 Assume that management has established a 10% minimum acceptable return for invested assets.
The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $180,400 $820,000 Commercial Division 96,000 480,000 Internet Division 71,400 420,000 Assume that management has established a 10% 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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100%
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 | $180,400 | $820,000 | ||
| Commercial Division | 96,000 | 480,000 | ||
| Internet Division | 71,400 | 420,000 |
Assume that management has established a 10% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
| Retail Division | Commercial Division | Internet Division | ||||
| Operating income | $180,400 | $96,000 | $71,400 | |||
| Minimum acceptable operating income as a percent of invested assets | ? | ? | ? | |||
| Residual income | ? | ? | ? |
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