Exercise $14-32($Algo$)$ Comparing Business Units Using Residual Income $($LO $14-3)$

Lauderdale Corporation Is organized in three geographical divisions $($regions$)$ with managers responsible for revenues, costs, and

assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance.

Corporate overhead $($all fixed$)$ Is allocated to the regions based on regional gross margin $($regional revenue minus regional cost of

sales$).$

The following information is from Lauderdale's first year of operations:

Information on the division assets in the three regions of Lauderdale Corporation follows:

Lauderdale Corporation has a cost of capital of $8\mathrm{.}6$ percent.

Requlred:

a$.$ Compute residual Income for the three regions. Ignore taxes.

b$.$ How have these regions performed?

Complete this question by entering your answers in the tabs below.

Compute residual income for the three regions. Ignore taxes.

Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.