Exercise 13-29 ROl; Residual Income (LO 13-1, 13-2) The following information applies to the questions displayed below. Wyalusing Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers' lots. Wyalusing expanded into the precut housing market when it acquired Fairmont Company, one of its suppliers. In this market, various types of lumber are precut into the appropriate lengths, banded into packages, and shipped to customers' lots for assembly. Wyalusing designated the Fairmont Division as an investment center. Wyalusing uses return on investment (ROl) as a performance measure with investment defined as average productive assets. Management bonuses are based in part on ROI. All investments are expected to earn a minimum return of 12 percent before income taxes Fairmont's ROI has ranged from 19.8 to 23.0 percent since it was acquired. Fairmont had an investment opportunity in 20x1 that had an estimated ROl of 18 percent. Fairmont's management decided against the investment because it believed the investment would decrease the division's overall ROI. The 20x1 income statement for Fairmont Division follows. The division's productive assets were $50,400,000 at the end of 20x1, a 5 percent increase over the balance at the beginning of the year. FAIRMONT DIVISION Income Statement For the Year Ended December 31, 20x1 (in thousands) Sales revenue Cost of goods sold $71,680 39,100 $32,580 Gross margin Operating expenses: Administrative Selling $ 5,030 17,710 22,740 $9,840 Income from operations before income taxes Required: 1-a. Calculate the return on investment (ROI) for 20x1 for the Fairmont Division 1-b. Calculate residual income for 20x1 for the Fairmont Division. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Calculate the return on investment (ROI) for 20x1 for the Fairmont Division. Return on investment 20 | % Required: 1-a. Calculate the return on investment (ROI) for 20x1 for the Fairmont Division 1-b. Calculate residual income for 20x1 for the Fairmont Division. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Calculate residual income for 20x1 for the Fairmont Division. (Enter your answer in dollars and not in thousands.) Residual income Exercise 13-29 ROl; Residual Income (LO 13-1, 13-2) The following information applies to the questions displayed below. Wyalusing Industries has manufactured prefabricated houses for over 20 years. The houses are constructed in sections to be assembled on customers' lots. Wyalusing expanded into the precut housing market when it acquired Fairmont Company, one of its suppliers. In this market, various types of lumber are precut into the appropriate lengths, banded into packages, and shipped to customers' lots for assembly. Wyalusing designated the Fairmont Division as an investment center. Wyalusing uses return on investment (ROl) as a performance measure with investment defined as average productive assets. Management bonuses are based in part on ROI. All investments are expected to earn a minimum return of 12 percent before income taxes Fairmont's ROI has ranged from 19.8 to 23.0 percent since it was acquired. Fairmont had an investment opportunity in 20x1 that had an estimated ROl of 18 percent. Fairmont's management decided against the investment because it believed the investment would decrease the division's overall ROI. The 20x1 income statement for Fairmont Division follows. The division's productive assets were $50,400,000 at the end of 20x1, a 5 percent increase over the balance at the beginning of the year. FAIRMONT DIVISION Income Statement For the Year Ended December 31, 20x1 (in thousands) Sales revenue Cost of goods sold $71,680 39,100 $32,580 Gross margin Operating expenses: Administrative Selling $ 5,030 17,710 22,740 $9,840 Income from operations before income taxes Required: 1-a. Calculate the return on investment (ROI) for 20x1 for the Fairmont Division 1-b. Calculate residual income for 20x1 for the Fairmont Division. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Calculate the return on investment (ROI) for 20x1 for the Fairmont Division. Return on investment 20 | % Required: 1-a. Calculate the return on investment (ROI) for 20x1 for the Fairmont Division 1-b. Calculate residual income for 20x1 for the Fairmont Division. Answer is not complete. Complete this question by entering your answers in the tabs below. Req 1A Req 1B Calculate residual income for 20x1 for the Fairmont Division. (Enter your answer in dollars and not in thousands.) Residual income