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Business Division Consumer Division Sales $42,800,000 $56,000,000 Cost of goods sold 23,500,000 30,500,000 Operating expenses 11,424,800 14,300,000 Invested assets 34,240,000 70,000,000

Business Division Consumer Division Sales $42,800,000 $56,000,000 Cost of goods sold 23,500,000 30,500,000 Operating expenses 11,424,800 14,300,000 Invested assets 34,240,000 70,000,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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3.  If management desires a minimum acceptable return on investment of 10%, determine the residual income for each division.

Divisional Performance Analysis and Evaluation The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Business Division Consumer Division Sales $42,800,000 $56,000,000 Cost of goods sold 23,500,000 30,500,000 Operating expenses 11,424,800 14,300,000 Invested assets 34,240,000 70,000,000
Transcribed Image Text:Divisional Performance Analysis and Evaluation The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Business Division Consumer Division Sales $42,800,000 $56,000,000 Cost of goods sold 23,500,000 30,500,000 Operating expenses 11,424,800 14,300,000 Invested assets 34,240,000 70,000,000
3. If management desires a minimum acceptable return on investment of 10%, determine the residual income for each division. Residual Income Business Division Consumer Division
Transcribed Image Text:3. If management desires a minimum acceptable return on investment of 10%, determine the residual income for each division. Residual Income Business Division Consumer Division
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