Exercise 10-15 Ivanhoe 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 Sales revenue $12,039,000 Variable expenses 4,808,000 Direct fixed expenses 6,749,000 Average assets 5,322,000 Required rate of return 11% Internet $2,690,000 1,381,000 1,189,000 2,790,000 Catalog Sales $3,645,000 2,161,000 1,010,000 2,360,000 11% 11% Calculate the current residual income for each distribution channel. (If the residual income is a loss then enter with a negative sign preceding the number, e.g. -5,125 or parenthesis, e.g. (5,125).) Residual Income Retail $ Online Catalog 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 $530,000 and is expected to generate $62,800 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, e.g. -5,125 or parenthesis, e.g. (5,125).) Residual Income Retail Online Catalog