The Following Is Divisional Information for Falcon Enterprises The Target Rate of Return Is 12% for the East

question 3

Essay

The following is divisional information for Falcon Enterprises:
$$\begin{array} { | l | r | r | } \hline & \text { East Division } & \text { West Division } \\\hline \text { Operating income } & \$ 250,000 & \$ 200,000 \\\hline \text { Net sales } & 2,225,000 & 1,575,000 \\\hline \text { Total assets at Jan. 1 } & 1,500,000 & 840,000 \\\hline \text { Total assets at Dec .31 } & 1,200,000 & 1,000,000 \\\hline\end{array}$$ The target rate of return is 12% for the East Division and is 10% for the West Division.
Compute residual income for each division.

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Definitions:

Intangible Resource

Assets that cannot be physically touched or held, such as brand reputation, intellectual property, or organizational culture.

Customer Service

The assistance and support provided by a company to those people who buy or use its products or services.

Management Function

encompasses the processes or activities that managers perform to plan, organize, lead, and control operations within an organization to achieve specified objectives.

Management Team

A group of individuals who manage and make decisions for a specific area of a company or organization.