Compute residual income for each division

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Reference no: EM132317337

Question :

A food manufacturer reports the following for two of its divisions for a recent year.

($millions)

Beverage
Division

Cheese
Division

Invested assets, beginning

$3,250

$6,200

Invested assets, ending

3,150

6,100

Sales

2,699

3,943

Operating income

367

652

Assume that each of the company's divisions has a required rate of return of 6.00%. Compute residual income for each division. answer in the millions:

($ millions)

Beverage

Cheese

 

 

 

Targeted return

 

 

Target income

 

 

Residual Income

Beverage

Cheese

 

 

 

 

 

 

Residual Income

 

 

Reference no: EM132317337

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