Return on investment : In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business. Residual Income: That income which is more than the normal income of that type of organization. Requirement-1: To Identify: Determine the residual income.

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Answer 1

Question

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

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Based on the data in problem 24- 4 above, assume that management has established a 10%minimum acceptable rate of return for invested assets. a. Determine the residual income for each division.b. Which division has the most residual income?

a. Compute the rate of return on investment for each division. b. Which division is the most profitable per dollar invested? Assume that management has established a 10% minimum acceptable rate of return for invested assets. c. Determine the residual income for each division. d. Which division has the most residual income?

Residual Income The operating income and the amount of invested assets in each division of Otte Industries are as follows: Operating Income Invested Assets Retail Division $94,600 $430,000 Commercial Division 118,000 590,000 Internet Division 129,200 760,000 Assume that management has established a 10% minimum acceptable rate of return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $94,600 $118,000 $129,200 Minimum acceptable operating income as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income?

Answer 2

Question

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

Expert Solution & Answer

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Answer 3

Question

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

Answer 6

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

Answer 7

Chapter 14, Problem 14.11E

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-1:

To Identify:

Determine the residual income.

Answer 8

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

Answer 9

To determine

Concept Introduction:

Return on investment: In this we divide the total return or profit with the investment into the assets of organization. It is the best way of calculating the % of return in the business.

Residual Income: That income which is more than the normal income of that type of organization.

Requirement-2:

To Identify:

Which division has highest residual income?

Answer 10

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Answer 11

Expert Solution & Answer

Answer 12

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Answer 13

Ch. 14 - When the manager has the responsibility and...Ch. 14 - The Accounts Payable Department has expenses of...Ch. 14 - Division A of Kern Co. has sales of $350,000, cost...Ch. 14 - Division L of Liddy Co. has a return on investment...Ch. 14 - Which approach to transfer pricing uses the price...Ch. 14 - Prob. 1CDQ Ch. 14 - Prob. 2CDQ Ch. 14 - Prob. 3CDQ Ch. 14 - Prob. 4CDQ Ch. 14 - Weyerhaeuser developed a system that assigns...

Solution Summary: The author explains that return on investment is the best way of calculating the % of return in the business. Residual income is more than the normal income of that type of organization.

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