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 Beverage Division ($millions) Division Invested assets, beginning Invested assets, ending Sales $6,100 6,000 3,942 710 $3,200 3,100 2,698 366 Operating income Assume that each of the company's divisions has a required rate of return of 10.00%. Compute residual income for each division. |(Enter your answers in millions.) ($ millions) Beverage Cheese Targeted return Target income Residual Income Beverage Cheese Residual income

Answer 1

	Beverage	Cheese
Average invested assets	3150	6050
Targeted return	10%	10%
Target income	315	605
Residual income	Beverage	Cheese
Operating income	366	710
Target income	315	605
Residual income	51	105