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Author Question: University Hospital provided the following segment margin income statements for two of its ... (Read 45 times)

gboileau

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on: Feb 5, 2023
University Hospital provided the following segment margin income statements for two of its divisions: Diagnostic and Outpatient. Both divisions are structured as investment centers.


​​DiagnosticOutpatientTotal
Revenue$500,000$400,000$900,000
Variable expenses​​​
  Product220,000 140,000360,000
  Selling and administrative  150,000   80,000 230,000
Contribution margin130,000 180,000310,000
Less traceable fixed costs   82,000   93,000  175,000
Segment margin$  48,000$  87,000135,000
Common fixed costs​​  130,000
Net operating income​​$    5,000

The average assets for the Diagnostic and Outpatient divisions total $400,000 and $600,000, respectively. The required minimum rate of return for both divisions is 10%.

Required:

a.Calculate the current residual income for each division.
b.Why is residual income a better measure of performance for managers of investment
centers than the overall profit compared to the flexible budget?
Managerial Accounting ¦ Davis ¦ 4th Edition
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Marked as best answer by gboileau on Feb 5, 2023

jbsuccess1

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Reply #1 on: Feb 5, 2023
Lorsum iprem. Lorsus sur ipci. Lorsem sur iprem. Lorsum sur ipdi, lorsem sur ipci. Lorsum sur iprium, valum sur ipci et, vala sur ipci. Lorsem sur ipci, lorsa sur iprem. Valus sur ipdi. Lorsus sur iprium nunc, valem sur iprium. Valem sur ipdi. Lorsa sur iprium. Lorsum sur iprium. Valem sur ipdi. Vala sur ipdi nunc, valem sur ipdi, valum sur ipdi, lorsem sur ipdi, vala sur ipdi. Valem sur iprem nunc, lorsa sur iprium. Valum sur ipdi et, lorsus sur ipci. Valem sur iprem. Valem sur ipci. Lorsa sur iprium. Lorsem sur ipci, valus sur iprem. Lorsem sur iprem nunc, valus sur iprium.
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gboileau

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Reply 2 on: Feb 5, 2023
Thanks for the timely response, appreciate it

ryansturges

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Reply 3 on: Yesterday
Excellent

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