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Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Division Cleaning Products Division Sales $34,690,000 $31,380,000 Operating income
Forchen, Inc., provided the following information for two of its divisions for last year:
Small Appliances Division | Cleaning Products Division | |
Sales | $34,690,000 | $31,380,000 |
Operating income | 2,682,500 | 1,253,200 |
Operating assets, January 1 | 6,390,000 | 5,640,000 |
Operating assets, December 31 | 7,490,000 | 6,650,000 |
Forchen, Inc., requires an 9 percent minimum rate of return.
Required:
1. Calculate residual income for the Small Appliances Division.
$ fill in the blank 1
2. Calculate residual income for the Cleaning Products Division.
$ fill in the blank 2
3. What if the minimum required rate of return was 10 percent? How would that affect the residual income of the two divisions?
Small Appliances Division residual income would be | |
Cleaning Products Division residual income would be |
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