Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Oriole Decor sells home decor items through three distribution channelsretail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center.

Oriole Decor sells home decor items through three distribution channelsretail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center. Selected results from the latest year are as follows:

Retail Stores Internet Catalog Sales
Sales revenue $9,940,000 $3,890,000 $3,040,000
Variable expenses 3,890,000 1,440,000 1,740,000
Direct fixed expenses 4,390,000 940,000 1,140,000
Average assets 7,890,000 3,890,000 1,700,000
Required rate of return 12% 12% 12%

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, e.g. (5,125).)

Residual Income
Retail $enter a dollar amount
Online $enter a dollar amount
Catalog $enter a dollar amount

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 $740,000 and is expected to generate $149,000 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, e.g. -5,125 or parenthesis, e.g. (5,125).)

Residual Income
Retail $enter a dollar amount
Online $enter a dollar amount
Catalog $enter a dollar amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Principles Volume 2

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

8th Canadian Edition

1119502551, 1-119-50255-5, 978-1119502555

More Books

Students also viewed these Accounting questions

Question

Keep your head straight on your shoulders

Answered: 1 week ago

Question

Be straight in the back without blowing out the chest

Answered: 1 week ago

Question

Wear as little as possible

Answered: 1 week ago