Business, 19.11.2019 01:31 s61371

Forchen, inc., provided the following information for two of its divisions for last year:

small appliances
division cleaning products
division
sales $34,680,000 $31,390,000
operating income 2,531,400 1,252,000
operating assets, january 1 6,397,000 5,710,000
operating assets, december 31 7,490,000 6,690,000
forchen, inc., requires an 8 percent minimum rate of return.

required:

1. calculate residual income for the small appliances division.

$

2. calculate residual income for the cleaning products division.

$

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 (higher/ lower/ unaffected)?
cleaning products division residual income would be (higher/ lower/ unaffected)?

Answers: 1

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Forchen, inc., provided the following information for two of its divisions for last year:

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