Small Appliances Division Cleaning Products Division

Sales $34,670,000 $31,320,000

Operating income 2,773,600 1,252,800

Operating assets, January 1 6,394,000 5,600,000

Operating assets, December 31 7,474,000 6,000,000

Forchen, Inc., requires an 8 percent minimum rate of return.

For the Small Appliances Division, calculate:

a. Average operating assets

b. Margin

c. Turnover

d. Return on investment (ROI)

2. For the Cleaning Products Division, calculate:

a. Average operating assets

b. Margin

c. Turnover

d. Return on investment (ROI)

3. What if the minimum required rate of return was 9 percent? How would that affect the residual income of the two divisions?