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Ready Products Inc. operates two divisions, each with its own manufacturing facility. The accounting system reports the following data for 2019: HEALTH CARE PRODUCTS
Ready Products Inc. operates two divisions, each with its own manufacturing facility. The accounting system reports the following data for 2019: HEALTH CARE PRODUCTS DIVISION Income Statement For the Year Ended December 31, 2019 (000s) Revenues Operating costs Operating income COSMETICS DIVISION $2,400 1,370 $1,030 Income Statement For the Year Ended December 31, 2019 (000s) Revenues Operating costs Operating income $1,680 820 $ 860 Ready estimates the useful life of each manufacturing facility to be 21 years. As of the end of 2019, 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 $118,000 per year for each division. The manufacturing facility is the only long-lived asset of either division. Current assets are $336,000 in each division. An index of construction costs, replacement costs, and liquidation values for the manufacturing facilities for the period that Ready has been operating is as follows:
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