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The vice president of operations of14 computers inc. is evaluating the performance of two divisions organized as investment centers.
The vice president of operations of14 computers inc. is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows:Business Computing Division$1,200,000780,000156,0002,000,000INSTRUCTIONSPrepare condensed divisional income statements for the year ended December 31, 2008,assuming that there were no service department charges.If management's minimum acceptable rate of return is 15% determine the residual income for each division.Discuss the evaluation of the two divisions, using the performance measures determined in parts (1),(2), and (3).
