Required:

Prepare condensed divisional income statements for the year ended December $31,20Y8,$ assuming that there were no support department allocations.

Recycling Industries

Divisional Income Statements

For the Year Ended December $31,20Y8$

decimal places.

If management desires a minimum acceptable return on investment of $10\%,$ determine the residual income for each division.

On the basis of operating income, the

$7$ Division is the more profitable of the two divisions. However, operating income

consider the amount of invested assets in each division. On the basis of

residual income, the

Division is the more profitable of the two divisions.