Question
In: Accounting
The vice president of operations of Pavone Company is evaluating the performance of two divisions organized...
The vice president of operations of Pavone Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows:
|
Business Division |
Consumer Division |
|
| Sales | $2,250,000 | $2,550,000 |
| Cost of goods sold | 1,320,000 | 1,330,000 |
| Operating expenses | 705,000 | 914,000 |
| Invested assets | 978,261 | 2,833,333 |
| Required: | |
| 1. | Prepare condensed divisional income statements for the year ended December 31, assuming that there were no service department charges. |
| 2. | Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. If required, round your final answers to one decimal place. |
| 3. | If management wants a minimum acceptable return of 17.00%, determine the residual income for each division. Use the minus sign to indicate a negative income. Round final answers to nearest whole dollar. |
| 4. | Discuss the evaluation of the two divisions, using the performance measures previously determined. |
Solutions
ekkarill92 answered 2 years agoRelated Solutions
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The vice president of operations of Free Ride Bike Company is
evaluating the performance of two divisions organized as investment
centers. Invested assets and condensed income statement data for
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Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is...
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evaluating the performance of two divisions organized as investment
centers. Invested assets and condensed income statement data for
the past year for each division are as follows:
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1. Prepare condensed divisional income
statements for the year ended December...
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is...
Divisional Performance Analysis and Evaluation
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evaluating the performance of two divisions organized as investment
centers. Invested assets and condensed income statement data for
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