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    Swiss Cleaning Manufacturing ROI residual income divisions

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    26. THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 26 THROUGH 28. The Swiss Cleaning Manufacturing Company, Inc. manufactures home cleaning products. The company has two divisions, Bleach and Cleanser. Because of different accounting methods and inflation rates, the company is considering multiple evaluation measures. The following information is provided for 2009:
    Bleach Division Cleanser Division
    ASSETS:
    Book Value $225,000 $450,000
    Current Value $300,000 $250,000

    INCOME:
    Book Value $150,000 $100,000
    Current Value $155,000 $105,000
    The company is currently using a 15% required rate of return.
    What are Bleach and Cleanser's respective return on investment based on book value?

    a 0.22 and 0.67
    b 0.42 and 0.52
    c 0.52 and 0.42
    d 0.67 and 0.22

    27. What are Bleach and Cleanser's respective return on investment based on current values?

    a 0.22 amd 0.67
    b 0.42 and 0.52
    c 0.52 and 0.42
    d 0.67 and 0.22

    28. What are Bleach and Cleanser's residual incomes based on book values, respectively?

    a $116,250 and $32,500
    b $110,000 and $67,500
    c $67,500 and $110,000
    d $37,500 and $116,250

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    https://brainmass.com/business/accounting/swiss-cleaning-manufacturing-residual-income-divisions-488422

    Solution Summary

    Your tutorial is attached in Excel showing you the approach, ratio computations, and support for problems like these so you can learn and advance.

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