Vernon Cough Drops operates two divisions. The following information pertains to each division for 2017:

	Division A				Division B
Sales	$	211,000			$	83,000
Operating income	$	16,400			$	9,300
Average operating assets	$	58,000			$	39,000
Company's desired rate of return		11	%			11	%

Required

a) Compute each divisions residual income.

b) Which division increased the companys profitability more?

Residual Income a. Division A Division B b. The division that increased the company's profitability more is