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Calculate the current residual income for each distribution channel. (If the residual income is a loss then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).)

Calculate the current residual income for each distribution channel. (If the residual income is a loss then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).)

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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Blossom Decor sells home decor items through three distribution channels—retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center. Selected results from the latest year are as follows: | | Retail Stores | Internet | Catalog Sales | |----------------------------|---------------|-----------|---------------| | **Sales revenue** | $10,120,000 | $4,070,000 | $3,400,000 | | **Variable expenses** | 4,070,000 | 1,620,000 | 1,920,000 | | **Direct fixed expenses** | 4,570,000 | 1,120,000 | 1,320,000 | | **Average assets** | 8,070,000 | 4,070,000 | 1,610,000 | | **Required rate of return**| 12% | 12% | 12% | **(a) Calculate the current residual income for each distribution channel.** (If the residual income is a loss, then enter with a negative sign preceding the number, e.g., -5,125 or parentheses, e.g., (5,125).) **Residual Income** - Retail: $__________ - Online: $__________ - Catalog: $__________
Transcribed Image Text:Blossom Decor sells home decor items through three distribution channels—retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center. Selected results from the latest year are as follows: | | Retail Stores | Internet | Catalog Sales | |----------------------------|---------------|-----------|---------------| | **Sales revenue** | $10,120,000 | $4,070,000 | $3,400,000 | | **Variable expenses** | 4,070,000 | 1,620,000 | 1,920,000 | | **Direct fixed expenses** | 4,570,000 | 1,120,000 | 1,320,000 | | **Average assets** | 8,070,000 | 4,070,000 | 1,610,000 | | **Required rate of return**| 12% | 12% | 12% | **(a) Calculate the current residual income for each distribution channel.** (If the residual income is a loss, then enter with a negative sign preceding the number, e.g., -5,125 or parentheses, e.g., (5,125).) **Residual Income** - Retail: $__________ - Online: $__________ - Catalog: $__________
**Customer Relationship Management System Impact Analysis** The corporate office is providing managers of each channel the option to implement a customer relationship management (CRM) system. This system is designed to help managers collect detailed data on their customers, enhancing the effectiveness of marketing strategies. The investment for the CRM system stands at $920,000 and it is forecasted to bring in an additional $167,000 in annual segment margin. **Task:** Calculate the residual income for each distribution channel if they decide to adopt the new CRM system. *Important:* If the residual income results in a loss, indicate this with a negative sign before the number (e.g., -5,125) or using parentheses (e.g., (5,125)). **Residual Income Calculation** - **Retail**: $ ________ - **Online**: $ ________ - **Catalog**: $ ________ Please fill in the values for each channel based on their performance with the new CRM system.
Transcribed Image Text:**Customer Relationship Management System Impact Analysis** The corporate office is providing managers of each channel the option to implement a customer relationship management (CRM) system. This system is designed to help managers collect detailed data on their customers, enhancing the effectiveness of marketing strategies. The investment for the CRM system stands at $920,000 and it is forecasted to bring in an additional $167,000 in annual segment margin. **Task:** Calculate the residual income for each distribution channel if they decide to adopt the new CRM system. *Important:* If the residual income results in a loss, indicate this with a negative sign before the number (e.g., -5,125) or using parentheses (e.g., (5,125)). **Residual Income Calculation** - **Retail**: $ ________ - **Online**: $ ________ - **Catalog**: $ ________ Please fill in the values for each channel based on their performance with the new CRM system.
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