Perez Cough Drops operates two divisions. The following information pertains to each division for 2018:...
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Accounting
Perez Cough Drops operates two divisions. The following information pertains to each division for 2018:
| Division A | Division B | ||||||
| Sales | $ | 215,000 | $ | 74,000 | |||
| Operating income | $ | 15,400 | $ | 9,100 | |||
| Average operating assets | $ | 56,000 | $ | 43,000 | |||
| Company's desired rate of return | 12 | % | 12 | % | |||
Required
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Compute each divisions residual income.
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Which division increased the companys profitability more?
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