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 Commercial Division Internet Division $159,600 138,600 115,000 $840,000 630,000 500,000 Assume that management has established a 12% minimum acceptable rate of return for invested assets. a. Determine the residual income for each division. < Operating income Minimum acceptable operating income as a percent of invested assets Residual income b. Which division has the most residual income? Commercial Division Feedhark Commercial Retail Division Internet Division Division $159,600 $138,600 $115,000
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 Commercial Division Internet Division $159,600 138,600 115,000 $840,000 630,000 500,000 Assume that management has established a 12% minimum acceptable rate of return for invested assets. a. Determine the residual income for each division. < Operating income Minimum acceptable operating income as a percent of invested assets Residual income b. Which division has the most residual income? Commercial Division Feedhark Commercial Retail Division Internet Division Division $159,600 $138,600 $115,000
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 11E: The operating income and the amount of invested assets in each division of Conley Industries are as...
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