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 Tearded December 31, 2011) Revenues $2,600 Operating costs 1,470 Operating income $1,150 CONTICS DIVISION The Statement For the Year Ended December 31, 2019 000) Ravenues $1,600 Operating costs 880 Operating income $920 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 14 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 charges $126.000 per year for each division. The manufacturing facility is the only long-lived asset of either division Current assets are $340,000 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: Liquidation Value Tear Cost Codex Replacement Cost Herth Care Cosmetics 2013 00 $100,000 $700,000 $ 700.000 2014 100,000 700.000 700,000 2015 86 1,100,000 400.000 400,000 2014 1,150,000 400.000 500,000 2017 1,200,000 500.000 2018 600,000 1,250,000 500.000 2019 100 600,000 300,000 400.000 700,000 Required: (Round your answers to 2 decimal places.) i Compute return on investment (Rol) for each division using the historical cost of divisional assets including current assets) as the investment base 2. Compute ROI for each division, incorporating current cost estimates as follows: a Gross book value (GBV) of long-lived assets plus book value of current assets b. GEV of long-lived assets testated to current cost using the index of construction costs plus book value of current assets. (Do not round Intermediate calculations. Round dollar values to the nearest whole dollar) cNet book value (NBV) of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round Intermediate calculations. Round dollar values to the nearest whole dollar) d. Current replacement cost of long-lived assets plus book value of current assets. e. Current liquidation value of long-lived assets plus book value of current assets Required: (Round your answers to 2 decimal places.) 1. Compute retum on investment (RON) for each division using the historical cost of disional assets (including current assets) as the Investment base 2. Compute ROI for each division, incorporating current cost estimates as follows: a. Gross book value (GBV) of long-lived assets plus book value of current assets b. GBV of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round Intermediate calculations. Round dollar values to the nearest whole dollar.) c.Net book value (NBV) of long-lived assets restated to current cost using the index of construction costs plus book value of current assets. (Do not round Intermediate calculations. Round dollar values to the nearest whole dollar), d. Current replacement cost of long-lived assets plus book value of current assets e Current liquidation value of long-lived assets plus book value of current assets. Health Care Cosmetice investment based on istorical cost of divisionals 2. Reunion ment based on 20. Retur vestment based on grow book value ouront coal 26. Robum on investment based on nel bookvaleurrent cost 2. Return on venent based on contreplacement.com 20. Rem on investment bond on cunetquidation value
