Exercise 22-12 Residual income LO A1

Kraft Foods Group reports the following for two of its divisions for a recent year. All numbers are in millions of dollars.

($millions)	Beverage Division			Cheese Division
Invested assets, beginning	$	2,880		$	4,655
Invested assets, ending		2,850			4,880
Sales		2,961			4,725
Operating income		489			694
Assume that each of the companys divisions has a required rate of return of 8%. Compute residual income for each division. (Enter your answer in millions. Round "Targeted return" to 2 decimal places. Round your answers to nearest whole dollar.)

($ millions)	Beverage	Cheese
Average assets
Targeted return	8%
Target income
Residual Income	Beverage	Cheese
Operating income	$489	$694
Less: Target income
Residual income