Oswego Company has three divisions: A, B, and C. The company has a hurdle rate of 7.25 percent. Selected operating data of the three divisions are as follows:
………………………………………….Division A……..Division B…………Division C
Sales…………………………………$1,262,000……..$934,000………….$915,000
Cost of goods sold…………………….772,000…………657,000…………..637,000
Miscellaneous operating expenses…..56,000…………..52,000…………..52,100
Allocated corporate expenses…………47,000………….35,000…………..36,500
Average invested assets……………..4,210,000………3,920,000……….3,295,000
Oswego is considering an expansion project in the upcoming year that will cost $5.00 million and return $417,000 per year. The project would be implemented by only one of the three divisions.
2. Compute the residual income for each division. (Round your answers to the nearest dollar amount. Negative amounts should be indicated by a minus sign. Omit the “$” sign in your response.)
Residual income
Division A $___________
Division B $___________
Division C $___________