Forchen, Inc., provided the following information for two of its divisions for last year:

	Small Appliances Division	Cleaning Products Division
Sales	$34,680,000	$31,390,000
Operating income	2,531,400	1,252,000
Operating assets, January 1	6,397,000	5,710,000
Operating assets, December 31	7,490,000	6,690,000

Forchen, Inc., requires an 8 percent minimum rate of return.

Required:

1. Calculate residual income for the Small Appliances Division.

$ __________

2. Calculate residual income for the Cleaning Products Division.

$ __________

3. What if the minimum required rate of return was 9 percent? How would that affect the residual income of the two divisions?

Small Appliances Division residual income would be	(higher/ lower/ unaffected)?
Cleaning Products Division residual income would be	(higher/ lower/ unaffected)?