Question

In: Accounting

Quinn Company has two divisions, Domestic and International. Invested assets and condensed income statement data for...

Quinn Company has two divisions, Domestic and International. Invested assets and condensed income statement data for each division for the year ended December 31, 2009, are as follows:

Domestic Division International Division

Revenues $675,000 $480,000

Operating expenses 450,000 372,400

Service department charges 90,000 50,000

Invested assets 600,000 384,000

Instructions

1. Prepare condensed income statements for the past year for each division.

2. Using the DuPont formula, determine the profit margin, investment turnover, and return

on investment for each division.

3. If management’s minimum acceptable return on investment is 10%, determine the residual

income for each division.

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