FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:
Division | ||
---|---|---|
Osaka | Yokohama | |
Sales | $ 9,600,000 | $ 26,000,000 |
Net operating income | $ 672,000 | $ 2,340,000 |
Average operating assets | $ 3,200,000 | $ 13,000,000 |
Required:
1. For each division, compute the
2. Assume that the company evaluates performance using residual income and that the minimum required
3. Is Yokohama’s greater amount of residual income an indication that it is better managed?
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