Question
Zachary Cough Drops operates two divisions. The following information pertains to each division for Year 1. Division A Division B Sales $ 219,000 $ 89,000
Zachary Cough Drops operates two divisions. The following information pertains to each division for Year 1.
| Division A | Division B | ||||||
| Sales | $ | 219,000 | $ | 89,000 | |||
| Operating income | $ | 15,500 | $ | 9,000 | |||
| Average operating assets | $ | 53,000 | $ | 41,000 | |||
| Company's desired rate of return | 18 | % | 18 | % | |||
Required
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Compute each divisions residual income.
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Which division increased the companys profitability more?
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Accounting Custom Edition For National American University
Authors: Charles T. Horngren, Walter T. Harrison Jr, M. Suzanne Oliver
9th Edition
1256297585, 978-1256297581
