The operating income and the amount of invested assets in each division of Conley Industries are as follows: Retail Division Commercial Division Internet Division Operating income Invested Assets $160,600 $730,000 120,000 600,000 124,200 690,000 Assume that management has established a 8% minimum acceptable 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? Retail Division Retail Division Commercial Division Internet Division $160,600 $120,000 $124,200

The operating income and the amount of invested assets in each division of Conley Industries are as follows: Retail Division Commercial Division Internet Division Operating income Invested Assets $160,600 $730,000 120,000 600,000 124,200 690,000 Assume that management has established a 8% minimum acceptable 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? Retail Division Retail Division Commercial Division Internet Division $160,600 $120,000 $124,200

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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4. The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Division Income from Operations Invested Assets Retail Division $5,500,000 $30,000,000 Commercial Division 6,750,000 23,000,000 Internet Division 1,500,000 12,000,000 a. Compute the return on investment for each division. b. Which division is the most profitable per dollar invested?
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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 %
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Return on investment 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 $156,200 $710,000 Commercial Division 56,000 280,000 Internet Division 194,400 720,000 a. Compute the return on investment for each division. (Round to the nearest whole number.) Division Percent Retail Division fill in the blank 1 % Commercial Division fill in the blank 2 % Internet Division fill in the blank 3 % b. Which division is the most profitable per dollar invested?
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