The sales, income from operations, and invested assets for each division of Salem Company are as follows:
$\begin{array}{llll}
\text { Invested}&\text { Income from}\
\text { Asssets } & \text { Operations } & \text { Sales } & \
\$ 3,500,000 & \$ 410,000 & \$ 4,000,000 & \text { Division C} \
4,000,000 & 600,000 & 3,500,000 & \text { Division D} \
7,000,000 & 780,000 & 2,250,000 & \text { Division E}
\end{array}$
Management has established a minimum rate of return for invested assets of 11%.
(a)Determine the residual income for each division.
(b)Bassed on residual income, which division is the most profitable?

Question

The sales, income from operations, and invested assets for each division of Salem Company are as follows:
 $\begin{array}{llll}
\text { Invested}&\text {  Income from}\
\text { Asssets } & \text { Operations } & \text { Sales } & \
\$ 3,500,000 & \$ 410,000 & \$ 4,000,000 & \text { Division C} \
4,000,000 & 600,000 & 3,500,000 & \text { Division D} \
7,000,000 & 780,000 & 2,250,000 & \text { Division E}
\end{array}$
 Management has established a minimum rate of return for invested assets of 11%.
 (a)Determine the residual income for each division. 
(b)Bassed on residual income, which division is the most profitable?

Quizplus · Accepted Answer

The Answer of The sales, income from operations, and invested assets for each division of Salem Company are as follows:
 $\begin{array}{llll}
\text { Invested}&\text {  Income from}\
\text { Asssets } & \text { Operations } & \text { Sales } & \
\$ 3,500,000 & \$ 410,000 & \$ 4,000,000 & \text { Division C} \
4,000,000 & 600,000 & 3,500,000 & \text { Division D} \
7,000,000 & 780,000 & 2,250,000 & \text { Division E}
\end{array}$
 Management has established a minimum rate of return for invested assets of 11%.
 (a)Determine the residual income for each division. 
(b)Bassed on residual income, which division is the most profitable?

The Sales, Income from Operations, and Invested Assets for Each