Question: Sunland Decor sells home decor items through three distribution channels-retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center.



Sunland Decor sells home decor items through three distribution channels-retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center. Selected results from the latest year are as follows: Retail Stores Internet Catalog Sales Sales revenue $9,970,000 $3,920,000 $3,100,000 Variable expenses 3,920,000 1,470,000 1,770,000 Direct fixed expenses 4,420,000 970,000 1,170,000 Average assets 7,920,000 3,920,000 1,730,000 11% Required rate of return. 11% 11% * Your answer is incorrect The corporate office is giving the managers of each channel the option of a customer relationship management system that will allow the managers to gather data about their customers and be more effective in their marketing efforts. The system will cost $770,000 and is expected to generate $152,000 in additional annual segment margin. Calculate the residual income of each distribution channel assuming it purchases the new customer relationship management system. (If the residual income is a loss then enter with a negative sign preceding the number, es -5,125 or parenthesis, es (5,1251) Residual Income $ Retail 825,300 $ Online 1.115,300 $ 97,600 Catalog
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
