1. A food manufacturer reports the following for two of its divisions for a recent year.

($ millions)	Beverage Division				Cheese Division
Invested assets, beginning	$	2,664			$	4,457
Invested assets, ending		2,594				4,401
Sales		2,682				3,926
Operating income		350				635

Assume that each of the companys divisions has a required rate of return of 6%. Compute residual income for each division

($ millions)	Beverage	Cheese
Targeted return
Target income
Residual Income	Beverage	Cheese
Residual income