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Sandhill Hospital provided the following segment margin income statements for two of its divisions: Diagnostic and Outpatient. Both divisions are structured as investment centers
Sandhill Hospital provided the following segment margin income statements for two of its divisions: Diagnostic and Outpatient. Both divisions are structured as investment centers Diagnostic Revenue $ 581,000 Outpatient $ 481,000 Total $ 1,062,000 Variable expenses Product 241,000 161.000 402,000 Selling and administrative 171,000 101.000 272.000 Contribution margin 169,000 219.000 388.000 Less traceable fixed costs 103,000 114,000 217.000 Segment margin $ 66.000 $ 105,000 171.000 Common fixed costs 151,000 Net operating income 20,000 The average assets for the Diagnostic and Outpatient divisions total $421,000 and $621.000, respectively. The required minimum rate of return for both divisions is 10% Calculate the current residual income for each division Diagnostic Current residual income $ Outpatient
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