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XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two
XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: (Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. -( x ) Residual income Data Table Snow Sports $ Non-Snow Sports $ Sales Operating Income 5,000,000 $ 1,000,000 $ 8,200,000 $ 1,640,000 $ Total Assets Current Liabilities 4,400,000 $ 460,000 6,400,000 $ 735,000 ROI 22.7% 25.6% XTreme's management has specified a target 17% rate of return. Print Print Done Done
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