Our company reported the following financial numbers for one of its divisions for the year; average total assets of $4,100,000; sales of $4,525,000; cost of goods sold of $2,550,000; and operating expenses of $1,372,000. Assume a target income of 10% of average invested assets.Compute residual income for the division:The investment center profit margin is:The investment turnover is:

To answer this question, we first need to calculate a few key figures:

1. Net Operating Income: This is calculated by subtracting the cost of goods sold and operating expenses from sales.

   Net Operating Income = Sales - Cost of Goods Sold - Operating Expenses Net Operating Income = $4,525,000 -$2,550,000 - $1,372,000 =$603,000

2. Investment Center Profit Margin: This is calculated by dividing the net operating income by sales.

   Investment Center Profit Margin = Net Operating Income / Sales Investment Center Profit Margin = $603,000 /$4,525,000 = 0.133 or 13.3%

3. Investment Turnover: This is calculated by dividing sales by the average total assets.

   Investment Turnover = Sales / Average Total Assets Investment Turnover = $4,525,000 /$4,100,000 = 1.104

4. Target Income: This is calculated by multiplying the average total assets by the target income rate.

   Target Income = Average Total Assets * Target Income Rate Target Income = $4,100,000 * 10$410,000

5. Residual Income: This is calculated by subtracting the target income from the net operating income.

   Residual Income = Net Operating Income - Target Income Residual Income = $603,000 -$410,000 = $193,000

So, the residual income for the division is $193,000, the investment center profit margin is 13.3%, and the investment turnover is 1.104.