a.
divisional income:
AC division | SO division | |
divisional income | 2,310 | 4,570 |
working:
income = sales -allocated oh - cost of goods sold - r & d- sg & a.
for AC division = 9200-630-3260-2300-700
=>$2,310.
SO division
=>17,000-1500-6400-3300-1230
=>$4,570.
b.
AC division | SO division | |
operating margin | 25.11% | 26.88% |
note:
operating margin = net income / sales *100
=>AC =2310/9200*100
=>25.11%.
SO = 4570/17,000*100
=>26.88%.
c.
AC division | SO division | |
ROI | 24.06% | 5.94% |
ROI = net income / investment *100
AC=>2310/9600*100
=>24.06%
SO division = 4570/77,000*100
=>5.94%
d.residual income.
AC division | SO division | |
Residual income | $1,446 | -,2360 |
residual income = net income - (capital invested *cost of capital)
=>AC = 2310 - (9600*9%)
=>$1,446.
SO = 4570-(77,000*9%)
=>-2,360
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