Divisional Income Statements and Return on Investment Analysis The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Cereal Snack Cake Retail Division Division Bakeries Division Sales $25,000,000 $8,000,000 $9,750,000 Cost of goods sold 16,670,000 5,575,000 6,795,000 Operating expenses 7,330,000 1,945,000 2,272,500 Invested assets 10,000,000 4,000,000 6,500,000 The management of The Crunchy Granola Company is evaluating each division as a basis for planning a future expansion of operations. Required: 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. The Crunchy Granola Company Divisional Income Statements For the Year Ended June 30, 20Y7 Retail Cereal Snack Cake Bakeries Division Division Division Sales Cost of goods sold Gross profit Operating expenses Operating income
Divisional Income Statements and Return on Investment Analysis The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Cereal Snack Cake Retail Division Division Bakeries Division Sales $25,000,000 $8,000,000 $9,750,000 Cost of goods sold 16,670,000 5,575,000 6,795,000 Operating expenses 7,330,000 1,945,000 2,272,500 Invested assets 10,000,000 4,000,000 6,500,000 The management of The Crunchy Granola Company is evaluating each division as a basis for planning a future expansion of operations. Required: 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. The Crunchy Granola Company Divisional Income Statements For the Year Ended June 30, 20Y7 Retail Cereal Snack Cake Bakeries Division Division Division Sales Cost of goods sold Gross profit Operating expenses Operating income
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Divisional Income Statements and Return on Investment Analysis
The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the
records of the three divisions for the year ended June 30, 20Y7, are as follows:
Cereal
Snack Cake
Retail
Division
Division
Bakeries Division
Sales
$25,000,000
$8,000,000
$9,750,000
Cost of goods sold
16,670,000
5,575,000
6,795,000
Operating expenses
7,330,000
1,945,000
2,272,500
Invested assets
10,000,000
4,000,000
6,500,000
The management of The Crunchy Granola Company is evaluating each division as a basis for planning a future expansion of operations.
Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations.
The Crunchy Granola Company
Divisional Income Statements
For the Year Ended June 30, 20Y7
Retail
Cereal
Snack Cake
Bakeries
Division
Division
Division
Sales
Cost of goods sold
Gross profit
Operating expenses
Operating income
Transcribed Image Text:2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. If required, round your answers to one decimal place.
Division
Profit Margin
Investment Turnover
ROI
Cereal Division
%
%
Snack Cake Division
%
%
Retail Bakeries Division
%
%
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