Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:

Division

Osaka

Yokohama

Sales

$

9,300,000

$

23,000,000

Net operating income

$

651,000

$

2,070,000

Average operating assets

$

2,325,000

$

11,500,000

1.

Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division.

	Osaka	Yokohama
Average operating assets
Net operating income	651,000	2,070,000
Minimum required return on average assets
Residual income	$651,000	$2,070,000