Refer to Exercise 10-12.

In exercise, 10-12

Required
a. Calculate the current residual income for each distribution channel.
b. Calculate the residual income of each distribution channel assuming it purchases the new customer relationship management system.
c. Why is the residual income for each distribution channel higher in part (b) than in part (a)?

Retail Stores Internet Sales revenue Variable expenses Direct fixed expenses Average assets Required rate of return $10,000,000 4,000,000 4,500,000 8,000,000 12% $4,000,000 1,500,000 1,000,000 4,000,000 Catalog Sales $3,200,000 1,800,000 1,200,000 2,000,000 12% 12%