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Compute each division residual income

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Reference no: EM132836430

Adams Cough Drops operates two divisions. The following information pertains to each division for 2018:

                                                           Division A                Division B

Sales                                             $202,000           $83,000

Operating income                                $15,600            $9,700

Average operating assets                        $56,000          $39,000

Company's desired rate of return                  12%            12%

Problem 1: Compute each division's residual income.

Problem 2: Which division increased the company's profitability more?

Reference no: EM132836430

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