Question
Harris Candy Drops operates two divisions. The following information pertains to each division for the year. Division A Division B Sales $ 480,000 $ 300,000
Harris Candy Drops operates two divisions. The following information pertains to each division for the year.
| Division A | Division B | |||||
| Sales | $ | 480,000 | $ | 300,000 | ||
| Operating income | $ | 32,000 | $ | 24,000 | ||
| Average operating assets | $ | 200,000 | $ | 160,000 | ||
| Company's desired rate of return | 10% |
| 10% |
| ||
Required
- Compute each divisions residual income.
- Which division increased the companys profitability more?
| Resident Income | ||
| a. | Division A | $ |
| Division B | $ | |
| b. | The division that increases the companys profitability more is |
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Accounting
Authors: Michael J. Jones
3rd Edition
1119977185, 9781119977186
