CH 10 Homework (Application) Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses Operating income $1,188,000 (534,600) $653,400 (237,600) $415,800 The manager of the Consumer Products Division is considering ways to increase the return on investment. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,980,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin Investment turnover Return on investment % % b. If expenses could be reduced by $59,400 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? Round the investment turnover to one decimal place. Profit margin. % Investment turnover Return on investment %
CH 10 Homework (Application) Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses Operating income $1,188,000 (534,600) $653,400 (237,600) $415,800 The manager of the Consumer Products Division is considering ways to increase the return on investment. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below. X Open spreadsheet a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,980,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin Investment turnover Return on investment % % b. If expenses could be reduced by $59,400 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? Round the investment turnover to one decimal place. Profit margin. % Investment turnover Return on investment %
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 3TIF
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Transcribed Image Text:CH 10 Homework (Application)
Profit Margin, Investment Turnover, and Return on Investment
The condensed income statement for the Consumer Products Division of Hydra Industries Inc. is as follows
(assuming no support department allocations):
Sales
Cost of goods sold
Gross profit
Administrative expenses
Operating income
$1,188,000
(534,600)
$653,400
(237,600)
$415,800
The manager of the Consumer Products Division is considering ways to increase the return on investment.
This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required
analysis, and input your answers in the questions below.
☑
Open spreadsheet
a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and
return on investment of the Consumer Products Division, assuming that $1,980,000 of assets have been invested
in the Consumer Products Division. Round the investment turnover to one decimal place.
Profit margin
Investment turnover
Return on investment
%
%
b. If expenses could be reduced by $59,400 without decreasing sales, what would be the impact on the profit
margin, investment turnover, and return on investment for the Consumer Products Division? Round the
investment turnover to one decimal place.
Profit margin
Investment turnover
%
%
Return on investment
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