Zachs, 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: 1(Click the icon to view the information.) Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). (1) – ( (2) × (3) ) = RI
Zachs, 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: 1(Click the icon to view the information.) Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). (1) – ( (2) × (3) ) = RI
Principles of Cost Accounting
17th Edition
ISBN:9781305087408
Author:Edward J. Vanderbeck, Maria R. Mitchell
Publisher:Edward J. Vanderbeck, Maria R. Mitchell
Chapter4: Accounting For Factory Overhead
Section: Chapter Questions
Problem 9E: A manufacturing company has two service and two production departments. Human Resources and Machine...
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Zachs,
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:1(Click
the icon to view the information.)Calculate each division's RI. Interpret your results.
First, select the formula to calculate residual income (RI).
|
(1)
|
–
|
(
|
(2)
|
×
|
(3)
|
)
|
=
|
RI
|
|
The residential division's RI is
|
|
.
|
The professional division's RI is
|
|
.
|
(4)
1: Data Table
|
Net Sales Revenue
|
Operating Income
|
Average Total Assets
|
---|---|---|---|
Residential
|
$570,000
|
$64,600
|
$190,000
|
Professional
|
1,090,000
|
164,000
|
400,000
|
Management has a
rate of return for each division.
27%
target (1)
Asset turnover ratio
Average total assets
Net sales revenue
Operating income
Target rate of return
(2)
Asset turnover ratio
Average total assets
Net sales revenue
Operating income
Target rate of return
(3)
Asset turnover ratio
Average total assets
Net sales revenue
Operating income
Target rate of return
(4)
Both divisions are
Neither division is
Only the professional division is
Only the residential division is
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