Presented below is information related to the Southern Division of Lumber, Inc. Contribution margin $1,211,900 Controllable margin $895,180 Average operating assets $4,069,000 Minimum rate of return 18 % Compute the Southern Division's return on investment and residual income. Return on investment Residual income $ %24

Presented below is information related to the Southern Division of Lumber, Inc. Contribution margin $1,211,900 Controllable margin $895,180 Average operating assets $4,069,000 Minimum rate of return 18 % Compute the Southern Division's return on investment and residual income. Return on investment Residual income $ %24

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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Residual Income The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $74,100 $390,000 Commercial Division 159,600 760,000 Internet Division 84,000 560,000 Assume that management has established a 12% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $74,100 $159,600 $84,000 Minimum acceptable income from operations 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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The following information is provided for each division. Net Income $6,100,000 2,758,000 1,000,000 Investment Center Cameras and camcorders Phones and communications Computers and accessories Assume a target income of 14% of average invested assets. Required: Compute residual income for each division. (Enter losses with a minus sign.) Target Income Targeted return Target income Residual Income Residual income (loss) Cameras and Camcorders Cameras and Camcorders Average Assets $ 25,700,000 19,700,000 10,400,000 % Phones and Communications Phones and Communications % Computers and Accessories Computers and Accessories %
The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $103,400 $470,000 Commercial Division 105,000 420,000 Internet Division 130,000 500,000 Assume that management has established a 10% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $103,400 $105,000 $130,000 Minimum acceptable operating income as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income?
Assume a company with two divisions (A and B) prepared the following segmented income statement: A B Total Sales $ 300,000 $ 200,000 $ 500,000 Variable expenses 120,000 140,000 260,000 Contribution margin 180,000 60,000 240,000 Traceable fixed expenses 100,000 80,000 180,000 Segment margin $ 80,000 $ (20,000) 60,000 Common fixed expenses 50,000 Net operating income $ 10,000 The dollar sales required for the company to break even is closest to:
Residual Income The Commercial Division of Galena Company has operating income of $264,070 and assets of $549,000. The minimum acceptable return on assets is 13%. What is the residual income for the division?
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Presented below is selected financial information for two divisions of Crane Brewing. Supply the missing information for the lettered items. Lager Lite Lager Contribution margin $500,000 $299,200 Controllable margin 199,920 (c) Average operating assets $ (a) $1,200,900 Minimum rate of return $ % (b) 14 % Return on investment Residual income 21 % $104,720 % (d) $204,153
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