Question
Residual Income The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested
Residual Income
The income from operations and the amount of invested assets in each division of Beck Industries are as follows:
| Income from Operations | Invested Assets | |||
| Retail Division | $154,000 | $770,000 | ||
| Commercial Division | 139,400 | 820,000 | ||
| Internet Division | 62,400 | 260,000 | ||
Assume that management has established a 12% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
| Retail Division | Commercial Division | Internet Division | |||||||
| Income from operations | $154,000 | $139,400 | $62,400 | ||||||
| Minimum acceptable income from operations as a percent of invested assets | |||||||||
| Residual income | $ | $ | $ | ||||||
b. Which division has the most residual income?
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Auditing Organizational Communication A Handbook Of Research Theory And Practice
Authors: Owen Hargie, Dennis Tourish
2nd Edition
0415414466, 978-0415414463
