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Compute residual income for each department

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Question - Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).

Investment Center

Sales

Net
Income

Average
Invested Assets

Electronics

$10,800,000

$409,500

$3,150,000

Sporting goods

7,600,000

1,044,000

5,800,000

Compute return on investment for each department.

Assume a target income level of 11.2% of average invested assets. Compute residual income for each department.

Reference no: EM132055266

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