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    Buttons Corporation: Compute residual income for each division

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    Buttons Corporation has two divisions: Northern and Southern. The minimum rate of return on assets is 10%. Data on the two divisions as follows:

    Northern Division Southern Division
    Controllable margin $ 70,000 $ 90,000
    Average operating assets $375,000 $700,000

    Compute residual income for each division.

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    Solution Summary

    The solution computes the residual income for each division.