The operating income and the amount of invested assets in each division of Conley Industries are as follows:   Operating income Invested Assets Retail Division $123,900   $590,000   Commercial Division 182,400   760,000   Internet Division 137,800   530,000   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 Operating income $123,900    $182,400     $137,800    Minimum acceptable operating income as a percent of invested assets             Residual income $   $   $   b.  Which division has the most residual income?

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
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Chapter1: Financial Statements And Business Decisions
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The operating income and the amount of invested assets in each division of Conley Industries are as follows:

  Operating income Invested Assets
Retail Division $123,900   $590,000  
Commercial Division 182,400   760,000  
Internet Division 137,800   530,000  

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
Operating income $123,900    $182,400     $137,800   
Minimum acceptable operating income as a percent of invested assets            
Residual income $   $   $  

b.  Which division has the most residual income?
 

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