RI Carrington Co. operates its two divisions as investment centers. Information about these divisions follows. Division 1 Division 2 $3,120,000 $1,110,000 1,578,000 198,000 504,000 525,000 Sales Total variable costs Total fixed costs Average assets invested a. What is the residual income of each division if the "charge" on invested assets is 13 percent? RI 294,000 4,308,000 Division 1 $ Division 2 $ Which division is doing a better job? + b. If the only change expected for next year is a sales increase of 20 percent, what will be the residual income of each division? RI Division 1 $ Division 2 $ Which division is doing a better job?

RI Carrington Co. operates its two divisions as investment centers. Information about these divisions follows. Division 1 Division 2 $3,120,000 $1,110,000 1,578,000 198,000 504,000 525,000 Sales Total variable costs Total fixed costs Average assets invested a. What is the residual income of each division if the "charge" on invested assets is 13 percent? RI 294,000 4,308,000 Division 1 $ Division 2 $ Which division is doing a better job? + b. If the only change expected for next year is a sales increase of 20 percent, what will be the residual income of each division? RI Division 1 $ Division 2 $ Which division is doing a better job?

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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