University Hospital Provided the Following Income Statement for Two of Its

University Hospital provided the following income statement for two of its divisions: Diagnostic and Outpatient.Both divisions are structured as investment centers.
$$\begin{array}{c}\textbf{Segment Margin Income Statement for University Hospital}\\\\\begin{array}{lrrr}& \underline{\textbf{Diagnostic}} & \underline{\textbf{Outpatient}} & \underline{\textbf{Total}} \\\text{Revenue} & \$500,000 & \$400,000 & \$900,000 \\\text{Variable expenses} \\\text{~~Product} & 220,000 & 140,000 & 360,000 \\\text{~~Selling and administrative} & \underline{150,000} & \underline{80,000} & \underline{230,000} \\\text{Contribution margin} & 130,000 & 180,000 & 310,000 \\\text{Less traceable fixed costs} & \underline{82,000} & \underline{93,000} & \underline{175,000} \\\text{Segment margin} & \underline{\underline{\$ 48,000}} & \underline{\underline{\$87,000}} & 135,000 \\\text{Common fixed costs} & & & \underline{130,000} \\\text{Net operating income} & & & \underline{\underline{\$ 5,000}} \\\end{array}\end{array}$$ The average assets for Diagnostic and Outpatient divisions total $400,000 and $600,000,respectively.The required minimum rate of return for both divisions is 10%.
a.Calculate the current residual income for each division.
b.Why is residual income a better measure of performance for managers of investment centers than the overall profit compared to the flexible budget?