6 Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales). The following information is from Lauderdale's first year of operations: eBook B Hint References Region I $ 1,220,000 460,000 450,000 Region I $ 720,000 Region II 650,000 1,317,500 Region III Lauderdale Corporation has a cost of capital of 8.6 percent. Required: a. Compute residual income for the three regions. Ignore taxes. b. How have these regions performed? Required A Required B Region II $ 1,686,000 820,000 660,000 Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Information on the division assets in the three regions of Lauderdale Corporation follows: Complete this question by entering your answers in the tabs below. Residual Income Region I Region III $ 2,270,000 1,150,000 880,000 Compute residual income for the three regions. Ignore taxes. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Region II Required A Region III Total Corporation $ 5,176,000 2,430,000 1,990,000 472,000 Required B >
6 Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales). The following information is from Lauderdale's first year of operations: eBook B Hint References Region I $ 1,220,000 460,000 450,000 Region I $ 720,000 Region II 650,000 1,317,500 Region III Lauderdale Corporation has a cost of capital of 8.6 percent. Required: a. Compute residual income for the three regions. Ignore taxes. b. How have these regions performed? Required A Required B Region II $ 1,686,000 820,000 660,000 Revenues Cost of sales Selling, General and Administrative (all fixed) Corporate overhead Information on the division assets in the three regions of Lauderdale Corporation follows: Complete this question by entering your answers in the tabs below. Residual Income Region I Region III $ 2,270,000 1,150,000 880,000 Compute residual income for the three regions. Ignore taxes. Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount. Region II Required A Region III Total Corporation $ 5,176,000 2,430,000 1,990,000 472,000 Required B >
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vishal
Transcribed Image Text:6
Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and
assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance.
Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of
sales).
The following information is from Lauderdale's first year of operations:
eBook
100
Hint
ច
References
Revenues
Cost of sales
Selling, General and
Administrative (all fixed)
Corporate overhead
Region I
$ 1,220,000
460,000
450,000
Region I
$ 720,000
Region II
650,000
1,317,500
Region III
Lauderdale Corporation has a cost of capital of 8.6 percent.
Required:
a. Compute residual income for the three regions. Ignore taxes.
b. How have these regions performed?
Required A Required B
Region II
$ 1,686,000
820,000
660,000
Information on the division assets in the three regions of Lauderdale Corporation follows:
Complete this question by entering your answers in the tabs below.
Residual Income
Region III
$ 2,270,000
1,150,000
880,000
Region I
Compute residual income for the three regions. Ignore taxes.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.
Region II
Region III
< Required A
Total
Corporation
$ 5,176,000
2,430,000
1,990,000
472,000
Required B >
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