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Menu for #3 - Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales

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Forchen, Inc., provided the following information for two of its divisions for last year: Small Appliances Cleaning Products Division Division Sales $34,630,000 $31,350,000 Operating income 2,679,600 1,253,600 Operating assets, January 1 6,398,000 5,780,000 Operating assets, December 31 7,500,000 6,270,000 Forchen, Inc., requires an 8 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. S 2. Calculate residual income for the Cleaning Products Division. S 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 Cleaning Products Division residual income would be higher. lower. unaffected

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