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Sunland Decor sells home decor items through three distribution channels-retail stores, the Internet, and catalog sales. Each distribution channel is evaluated as an investment center.
Sunland Decor sells home decor items through three distribution channels-retail 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 $10,080,000 $4,030,000 Catalog Sales $3,320,000 4,030.000 1,580,000 1,880,000 Sales revenue Variable expenses Direct fixed expenses Average assets 4,530,000 1,080,000 1,280,000 1.650,000 8,030,000 4,030,000 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, eg.-5,125 or parenthesis, es. (5,125)) Residual income Retail Online Catalog 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 $880,000 and is expected to generate $163,000 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, eg -5,125 or parenthesis, es (5,125) Residual income S Retail $ Online Catalog
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