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Need help. Blossom Decor sells home decor items through three distribution channels-retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an
Need help.
Blossom 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: Sales revenue Retail Stores $ 10,120,000 4.070,000 4,570,000 8,070,000 Internet $ 4,070,000 1.620.000 1.120,000 4,070,000 Catalog Sales $3,400,000 1.920,000 Variable expenses Direct fixed expenses Average assets Required rate of return 1,320,000 1,610,000 12% 1296 12% (a) 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, eg. (5,125)) Residual Income $ Retail $ Online $ Catalog (b). 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 $ 920,000 and is expected to generate $ 167,000 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, eg. -5,125 or parenthesis, eg. (5,125).) Residual Income $ Retail $ Online Catalog Step by Step Solution
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