Gletchen Cough Drops operates two divisions. The following information pertains to each division for 2017:
Division A Division B
Sales..................................................... $480,000........................ $300,000
Operating income...................................... $ 32,000......................... $ 24,000
Average operating assets............................. $200,000......................... $160,000
Company's desired rate of return........................ 10% ................................10%
Required
a. Compute each division's residual income.
b. Which division increased the company's profitability more?