Carrington Co. operates its two divisions as investment centers. Information about these divisions follows. Division 1...

 

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Carrington Co. operates its two divisions as investment centers. Information about these divisions follows. Division 1 Division 2 Sales $3,120,000 $1,110,000 Total variable costs 1,578,000 198,000 294,000 504,000 4,308,000 525,000 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 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? Division 1 $ Division 2 $ RI Which division is doing a better job? Carrington Co. operates its two divisions as investment centers. Information about these divisions follows. Division 1 Division 2 Sales $3,120,000 $1,110,000 Total variable costs 1,578,000 198,000 294,000 504,000 4,308,000 525,000 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 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? Division 1 $ Division 2 $ RI Which division is doing a better job?

Answer rating: 100% (QA)

a Residual Income for Each Division To calculate the residual income RI well follow these steps Calc... View the full answer