6 Residual IncomeThe operating income and the amount of invested assets in each division of Otte Industries are as follows:Operating Income Invested AssetsRetail DivisionCommercial DivisionInternet Division$159,600138,600115,000$840,000630,000500,000Assume that management has established a 12% minimum acceptable rate of return for invested assets.a. Determine the residual income for each division.<Operating incomeMinimum acceptable operating income as apercent of invested assetsResidual incomeb. Which division has the most residual income?Commercial DivisionFeedharkCommercialRetail DivisionInternet DivisionDivision$159,600$138,600$115,000

Residual income is that income which is higher than minimum operating income.Minimum operating…

Answered: Residual Income The operating income…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 11E: The operating income and the amount of invested assets in each division of Conley Industries are as...

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Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last years results: Washingtons actual cost of capital was 12%. Exercise 11-32 Residual Income Refer to the information for Washington Company above. In addition, Washington Companys top management has set a minimum acceptable rate of return equal to 8%. Required: 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
Residual income The Commercial Division of Galena Company has operating income of 12,680,000 and assets of 74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the division?
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 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 $96,900 510,000 Commercial Division 64,600 380,000 Internet Division 141,600 590,000 Assume that management has established a 8% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $96,900 $64,600 $141,600 Minimum acceptable of income from operations Residual income b. Which division has the most residual income? Internet Division
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?
The sales, operating income, and invested assets for each division of Salem Company are as follows: Sales OperatingIncome InvestedAssets Division C $4,000,000 $410,000 $3,500,000 Division D 3,500,000 600,000 4,000,000 Division E 2,250,000 780,000 7,000,000 Management has established a minimum rate of return for invested assets of 11%. a. Determine the residual income for each division. Residual Income Division C $fill in the blank 1 Division D $fill in the blank 2 Division E $fill in the blank 3 b. Based on residual income, which division is the most profitable?
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 $126,000 $630,000 Commercial Division 126,000 700,000 Internet Division 105,000 700,000 Assume that management has established a 10% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $126,000 $126,000 $105,000 Minimum acceptable income from operations as a percent of invested assets fill in the blank 1 fill in the blank 2 fill in the blank 3 Residual income $fill in the blank 4 $fill in the blank 5 $fill in the blank 6
The sales, income from operations, and invested assets for each division of Wren Company are as follows: Division c Division D Division E Sales $5,000,000 6,800,000 3,750,000 Income from Operations $630,000 760,000 750,000 Invested Assets $4,000,000 3,900,000 7,500,000 Management has established a minimum rate of return for invested assets of 8%. a. Determine the residual income for each division. Division C: Division D: Division E: b. Based on residual income, which of the divisions is the most profitable?
Residual Income The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $180,400 $820,000 Commercial Division 96,000 480,000 Internet Division 71,400 420,000 Assume that management has established a 10% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $180,400 $96,000 $71,400 Minimum acceptable operating income as a percent of invested assets ? ? ? Residual income ? ? ?
The sales, income from operations, and invested assets for each division of Wren Company are as follows: 　　 Sales Income from Operations Invested Assets Division C $5,000,000 $630,000 $4,000,000 Division D 6,800,000 760,000 3,900,000 Division E 3,750,000 750,000 7,500,000 Management has established a minimum rate of return for invested assets of 10%. What is the Residual Income for Division C? What is the Residual Income for Division D? What is the Residual Income for Division E? Based on Residual Income, Division __?__ is the most profitable.
Residual Income 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 $63,800 $290,000 Commercial Division 58,900 310,000 Internet Division 144,000 800,000 Assume that management has established a 8% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Income from operations $63,800 $58,900 $144,000 Minimum acceptable income from operations as a percent of invested assets fill in the blank 1 fill in the blank 2 fill in the blank 3 Residual income $fill in the blank 4 $fill in the blank 5 $fill in the blank 6 b. Which division has the most residual income?
Based on the data in problem 24- 4 above, assume that management has established a 10%minimum acceptable rate of return for invested assets. a. Determine the residual income for each division.b. Which division has the most residual income?

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