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 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?
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 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 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 | 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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