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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

  1. Compute each divisions residual income.

  2. Which division increased the companys profitability more?

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