am. 103. ←Kalu Company, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisionalinformation was available for the past yearView the informationManagement has a 25% target rate of retum for each division.Calculate each division's RI. Interpret your results.First, select the formula to calculate residual income (RI).Residual income Operating income (Target rate of return Average total assets)Residential division's RIProfessional division's RiBoth divisions areexceeding management's expectations.Neither division isOnly the professional division isOnly the residential division isCOTInformationResidentialProfessionalNet Sales Revenue$580,000 51.170.000PrintOperating Income Average Total Assets60,720 $184,000159,360384,000IDoneX

Residual income, commonly referred to as economic profit or economic value-added (EVA), is a metric…

Kalu Company, a national manufacturer of lawn mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional ← information was available for the past year. View the information. Management has a 25% target rate of retum for each division. Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (R). Residual income Operating income (Target rate of return Average total assets) Residential division's RI Professional division's Ri Both divisions are Neither division is exceeding management's expectations. Only the professional division is Only the residential division is Information Residential Professional Net Sales Revenue Operating Income Average Total Assets 580,000 $ 184,000 10,720 $ 159.360 384,000 1.370.000 Print -X Done

Kalu Company, a national manufacturer of lawn mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional ← information was available for the past year. View the information. Management has a 25% target rate of retum for each division. Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (R). Residual income Operating income (Target rate of return Average total assets) Residential division's RI Professional division's Ri Both divisions are Neither division is exceeding management's expectations. Only the professional division is Only the residential division is Information Residential Professional Net Sales Revenue Operating Income Average Total Assets 580,000 $ 184,000 10,720 $ 159.360 384,000 1.370.000 Print -X Done

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...

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Kalu Company, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year: View the information. Management has a 23% target rate of retum for each division. Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). Residual income= Residential division's Ri= Professional division's RI 196000 exceeding management's expectations. COO Information Net Sales Revenue Residential $ Professional Operating Income 600,000 $ 1,180,000 Print 66,640 S 162,360 Done 1 Average Total Assets 196.000 396,000 X
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