Pharoah 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 $10,060,000 $4,010,000 $3,260,000

Variable expenses $4,010,000 $1,560,000 $1,860,000

Direct fixed expenses $4,510,000 $1,060,000 $1,260,000

Average assets $8,010,000 $4,010,000 $1,670,000

Required rate of return 10% 10% 10%

A) Calculate the current residual income for each distribution channel.

I) Retail Stores $.

II) Internet $..

III) Catalog Sales $.

B)The corporate office is giving the managers of each channels 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 $860,000 and is expected to generate $161,000 in additional annual segment margin

Calculate the residual income of each distribution channel assuming it purchases the new customer relationship management system.

Residual Income

I) Retail= $=

II) Internet= $=

III) Catalog Sales= $= ..