Question

! Required information [The following information applies to the questions displayed below.] A food manufacturer reports the following for two of its divisions for a recent year. Cheese Division $5,700 5,600 Beverage Division $3,000 ($millions) Invested assets, beginning Invested assets, ending Sales 2,900 2,694 3,938 Operating income 362 647 Assume that each of the company's divisions has a required rate of return of 8.00%. Compute residual income for each division. (Enter your answers in millions.) ($ millions) Beverage Cheese Targeted return Target income Beverage Cheese Residual Income Residual income

Answer 1

	Beverage	Cheese
Average Invested Assets	$2,950	$5,650
Targeted Return	8%	8%
Targeted Income	$236	$452
Residual Income	Beverage	Cheese
Operating Income	$362	$647
Targeted Income	$236	$452
Residual Income	$126	$195