2. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each division. (Round to 2nd decimal places). 3. If management desires a minimum acceptable rate of return of 8%, determine the residual income for each division. 4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3).
2. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each division. (Round to 2nd decimal places). 3. If management desires a minimum acceptable rate of return of 8%, determine the residual income for each division. 4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3).
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 11E: The operating income and the amount of invested assets in each division of Conley Industries are as...
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![2. Using the DuPont formula, determine the profit margin, investment turnover, and
return on investment for each division. (Round to 2nd decimal places).
3. If management desires a minimum acceptable rate of return of 8%, determine the
residual income for each division.
4. Discuss the evaluation of the two divisions, using the performance measures
determined in parts (1), (2), and (3).](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fce3e4d92-1b1a-4578-961a-4fada023ddec%2F86c5d369-180d-4263-a991-a53804625c2d%2Fp3dumky_processed.png&w=3840&q=75)
Transcribed Image Text:2. Using the DuPont formula, determine the profit margin, investment turnover, and
return on investment for each division. (Round to 2nd decimal places).
3. If management desires a minimum acceptable rate of return of 8%, determine the
residual income for each division.
4. Discuss the evaluation of the two divisions, using the performance measures
determined in parts (1), (2), and (3).
![The vice president of operations of Moab Bike Company is evaluating the
performance of two divisions organized as investment centers. Invested assets and
condensed income statement data for the past year ending October 31, 20Y9, for
each division are as follows:
Touring Bike Division
Trail Bike Division
$1,500,000
900,000
495,000
750,000
Sales
Cost of goods sold
Operating expenses
Invested assets
Instructions
1. Prepare condensed divisional income statements for the year ended October 31,
20Y9, assuming that there were no service department charges.
Touting Bike Division
Sales
1,500,000
Cost of Goods Sold (900,000)
Gross Profit
600,000
Operating Expenses
(495,000)
Operating Income
$5,400,000
4,000,000
968,000
3,600,000
105,000
Trial Bike Division
Sales
5,400,000
Cost of Goods Sold (4,000,000)
Gross Profit
1.400,000
Operating Expenses
(968,000)
Operating Income
432,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fce3e4d92-1b1a-4578-961a-4fada023ddec%2F86c5d369-180d-4263-a991-a53804625c2d%2Fypxkvaq_processed.png&w=3840&q=75)
Transcribed Image Text:The vice president of operations of Moab Bike Company is evaluating the
performance of two divisions organized as investment centers. Invested assets and
condensed income statement data for the past year ending October 31, 20Y9, for
each division are as follows:
Touring Bike Division
Trail Bike Division
$1,500,000
900,000
495,000
750,000
Sales
Cost of goods sold
Operating expenses
Invested assets
Instructions
1. Prepare condensed divisional income statements for the year ended October 31,
20Y9, assuming that there were no service department charges.
Touting Bike Division
Sales
1,500,000
Cost of Goods Sold (900,000)
Gross Profit
600,000
Operating Expenses
(495,000)
Operating Income
$5,400,000
4,000,000
968,000
3,600,000
105,000
Trial Bike Division
Sales
5,400,000
Cost of Goods Sold (4,000,000)
Gross Profit
1.400,000
Operating Expenses
(968,000)
Operating Income
432,000
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