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Investment Center Net Income Average Assets Cameras and camcorders $ 4,500,000 $ 24,500,000 Phones and communications 3,135,000 20,900,000 Computers and accessories 950,000 16,800,000 Assume a target income of 15% of average invested assets. Required: Compute residual income for each division. (Enter losses with a minus sign.)

Respuesta :

Answer:

$825,000; $0; -$1,570,000

Explanation:

For Cameras and camcorders,

Average assets = $ 24,500,000

Net income = $4,500,000

Target income = 15% of Average assets

                         = 0.15 × $ 24,500,000

                         = $3,675,000

Residual income = Net income  - Target income

                            = $4,500,000 - $3,675,000

                            = $825,000

For Phones and communications,

Average assets = $20,900,000

Net income = $3,135,000

Target income = 15% of Average assets

                         = 0.15 × $20,900,000

                         = $3,135,000

Residual income = Net income  - Target income

                            = $3,135,000 - $3,135,000

                            = $0

For Computers and accessories,

Average assets = $16,800,000

Net income = $950,000

Target income = 15% of Average assets

                         = 0.15 × $16,800,000

                         = $2,520,000

Residual income = Net income  - Target income

                            = $950,000 - $2,520,000

                            = -$1,570,000

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