Question
Problem 19-35 (Algo) Return on Investment; Different Measures for Total Assets [LO 19-1] Ready Products Incorporated operates two divisions, each with its own manufacturing
Problem 19-35 (Algo) Return on Investment; Different Measures for Total Assets [LO 19-1] Ready Products Incorporated operates two divisions, each with its own manufacturing facility. The accounting system reports the following data for 2022: HEALTH CARE PRODUCTS DIVISION Income Statement For the Year Ended December 31, 2022 Revenues Operating costs Operating income COSMETICS DIVISION $ 1,700 1,020 $ 680 Income Statement For the Year Ended December 31, 2022 Revenues Operating costs Operating income $ 1,260 610 $ 650 Ready estimates the useful life of each manufacturing facility to be 21 years. As of the end of 2022, the plant for the health care division is 4 years old, while the manufacturing plant for the cosmetics division is 6 years old. Each plant had the same cost at the time of purchase, and both have useful lives of 21 years with no salvage value. The company uses straight-line depreciation and the depreciation charge is $90,000 per year for each division. The manufacturing facility is the only long-lived asset of either division. Current assets are $322,000 in each division.
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