Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses $1,296,000 (583,200) $712,800 (453,600) $259,200 Operating income The manager of the Consumer Products Division is considering ways to increase the return on investment. 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 $2,160,000 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 5 X % Investment turnover Return on investment b. If expenses could be reduced by $64,800 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 % %

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 9EB: Classify each of the following performance measures into the balanced scorecard perspective to which...
Question

Subject: accounting 

 

Profit Margin, Investment Turnover, and Return on Investment
The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no
support department allocations):
Sales
Cost of goods sold
Gross profit
Administrative expenses
Operating income
The manager of the Consumer Products Division is considering ways to increase the return on investment.
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 $2,160,000 of assets have been invested in the Consumer Products
Division. Round the investment turnover to one decimal place.
Profit margin
5 X %
Investment turnover
Return on investment
b. If expenses could be reduced by $64,800 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
$1,296,000
(583,200)
$712,800
(453,600)
$259,200
Return on investment
%
%
%
Transcribed Image Text:Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department allocations): Sales Cost of goods sold Gross profit Administrative expenses Operating income The manager of the Consumer Products Division is considering ways to increase the return on investment. 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 $2,160,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin 5 X % Investment turnover Return on investment b. If expenses could be reduced by $64,800 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 $1,296,000 (583,200) $712,800 (453,600) $259,200 Return on investment % % %
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