Ready Products Incorporated operates two divisions, each with its own manufacturing facility. The accounting system reports thefollowing data for 2022:HEALTH CARE PRODUCTS DIVISIONIncome StatementFor the Year Ended December 31, 2022RevenuesOperating costsOperating incomeCOSMETICS DIVISIONIncome StatementYear2016201720182019202020212022RevenuesOperating costsOperating incomeFor the Year Ended December 31, 2022Ready estimates the useful life of each manufacturing facility to be 21 years. As of the end of 2022, the plant for the health caredivision is 4 years old, while the manufacturing plant for the cosmetics division is 6 years old. Each plant had the same cost at the timof purchase, and both have useful lives of 21 years with no salvage value. The company uses straight-line depreciation and thedepreciation charge is $110,000 per year for each division. The manufacturing facility is the only long-lived asset of either division.Current assets are $332,000 in each division.$ 2,2001,270$930An Index of construction costs, replacement costs, and liquidation values for the manufacturing facilities for the period that Ready hasbeen operating is as follows:CostIndex808284899496100$ 1,560760$ 800$ 1,000,0001,000,0001,100,0001,150,0001,200,0001,250,0001,300,000Replacement Cost Health Care$ 600,000Liquidation Value600,000500,000500,000600,000600,000500,000Cosmetics$ 600,000600,000500,000600,000700,000700,000800,000Required:(Round your answers to 2 decimal places.)1. Compute return on Investment (ROI) for each division using the historical cost of divisional assets (including current assets) as theInvestment 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 notround 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 currentassets. (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.1.Return on investment based on historical cost of divisional assets2a. Return on investment based on gross book value2b. Return on investment based on gross book value at current cost2c. Return on investment based on net book value at current cost2d. Return on investment based on current replacement cost2e. Return on investment based on current liquidation valueHealth Care%6%%%%Cosmetics%696%6%69696

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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 Income Statement $ 2,200 1,270 $ 930 For the Year Ended December 31, 2022 Revenues Operating costs Operating income $ 1,560 760 $ 800

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 Income Statement $ 2,200 1,270 $ 930 For the Year Ended December 31, 2022 Revenues Operating costs Operating income $ 1,560 760 $ 800

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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