Data from Excercise 10-8

Refer to the data given in Exercise 10-8. REQUIRED: 1. Computo the residual income for each of the opportunities. (Round to the nearest dolar) ANSWERS Check Figures: Fruit Penich ridual income = $200 2. Compute the divisional residual income (rounded to the nearest dollar) for each of the following four wternatives: The juice box is added b. The fruit pouch is added 6. Both investments are added d. Neither investment is made, the status quo is maintained Assuming that divisional managers are evaluated and rewarded on the basis of residual income, which alternativo do you think the divisional manager will choose? 3. Based on your answer in Requirement 2. compute the profit or loss trom the divisional manager's investment decision was the correct decision made? Juice Bos Fruit Pouch . 50.000 40.000 Oy Allard's corporate headquarters has made available up to $100,000 of capital for this division Any funds not invested by the division will be retained by headquarters and invested to earn the company's minimum required rate of return. 9 percent