Crane Decor sells home decor items through three distribution channels-retail stores, the Internet, and catalog sales. Eachdistribution channel is evaluated as an investment center. Selected results from the latest year are as follows:Sales revenueVariable expensesDirect fixed expensesAverage assetsRequired rate of return(a)RetailOnlineCatalogRetail StoresLA$9,910,0003,860,0004,360,0007,860,00011%InternetResidual Income$3,860,0001,410,000910,0003,860,00011%Catalog SalesCalculate the current residual income for each distribution channel. (If the residual income is a loss then enter with a negativesign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).)$3,010,0001,710,0001,110,0001,960,00011%

Lets understand the basics.Residual income is a income generated over and above of minimum required…

Crane 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: Sales revenue Variable expenses Direct fixed expenses Average assets Required rate of return Retail Stores $9,910,000 3,860,000 4,360,000 7,860,000 11% Internet $3,860,000 1,410,000 910,000 3,860,000 11% Catalog Sales $3,010,000 1,710,000 1,110,000 1,960,000 11%

Crane 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: Sales revenue Variable expenses Direct fixed expenses Average assets Required rate of return Retail Stores $9,910,000 3,860,000 4,360,000 7,860,000 11% Internet $3,860,000 1,410,000 910,000 3,860,000 11% Catalog Sales $3,010,000 1,710,000 1,110,000 1,960,000 11%

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 37P

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