Recent Posts • Latest Topics • Unanswered Questions

University Hospital provided the following segment margin income statements for two of its ...

aznmistyblue

wrote...

Go to Answer

Posts: 140

Rep:

2 years ago

University Hospital provided the following segment margin income statements for two of its ...

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

Diagnostic

Outpatient

Total

Revenue	$500,000	$400,000	$900,000
Variable expenses
Product	220,000	140,000	360,000
Selling and administrative	150,000	80,000	230,000
Contribution margin	130,000	180,000	310,000
Less traceable fixed costs	82,000	93,000	175,000
Segment margin	$ 48,000	$ 87,000	135,000
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?

Textbook

Managerial Accounting

Edition: 4^th

Author: Davis

Read 107 times

1 Reply

Report

Replies

Answer verified by a subject expert

relisabeth

wrote...

Posts: 142

Rep:

2 years ago

More solutions for this book are available here

Report

Related Topics

aznmistyblue Author

wrote...

2 years ago

Correct

Turboturner

wrote...

Yesterday

Good timing, thanks!

amandamraz

wrote...

2 hours ago

Thanks

New Topic

Quick Reply

Explore

Post your homework questions and get free online help from our incredible volunteers

221 People Browsing

Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook

Related Images

356

420

429

Your Opinion

Previous poll results: Which country would you like to visit for its food?

Bonobos, Chimpanzees, and the 98% DNA Link

Strange Ingredients Lurking in Doritos Chips

Courses by Biology Forums

The Toxic Skin and Fungi Defense

It's sore throat season, why does my mucus have red spots?

Ready to ask a question on Biology Forums? Try it out

Join Our Community

Biology Forums - Study Force is a free online homework help service catered towards college and high school students. Get homework help and answers to your toughest questions in biology, chemistry, physics, mathematics, engineering, accounting, business, humanities, and more. Master your assignments quickly with thousands of step-by-step solutions to countless textbook questions asked and answered by our members. If we don't have your question, don't worry. You can ask any homework question and get expert homework help in as little as two hours.

Our extensive online study community is made up of college and high school students, teachers, professors, parents and subject enthusiasts who contribute to our vast collection of study resources: textbook solutions, study guides, practice tests, practice problems, lecture notes, equation sheets and more. With our help, your homework will never be the same!

Join for free today

How is Biology Forums - Study Force different than tutoring?

Home Search Q & A Board Gallery Resource Library Blog Dictionary Chat	Quick Links Start a Topic Latest Topics Unanswered Questions Courses Study Tools Browse by Textbook	Social Facebook YouTube Community Stats Who's Online Trending Staff	Help About Us Take the Tour Study Tips Posting Guidelines Terms and Policies Contact Us
Biology Forums - Study Force © 2010-2025 \| Powered by SMF \| SMF © 2015, Simple Machines \| Sitemap Biology-Forums.com is not affiliated with any publisher. Book covers, title and author names appear for reference only.