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Divisional income statements and return on investment analysis. E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Fee revenue $1,580,000 $1,640,000 $1,570,000 Operating expenses 768,000 689,600 1,109,200 Invested assets 5,800,000 4,800,000 3,200,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: Line Item Description Fee revenue Mutual Fund Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 2018 Operating expenses Operating income Division Electronic Brokerage Division Mutual Fund Division Mutual Electronic Investment Fund Brokerage Banking Division Division Division 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Profit Margin Investment Turnover Investment Banking Division % % Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. % ROI % % %

Divisional income statements and return on investment analysis. E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Fee revenue $1,580,000 $1,640,000 $1,570,000 Operating expenses 768,000 689,600 1,109,200 Invested assets 5,800,000 4,800,000 3,200,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: Line Item Description Fee revenue Mutual Fund Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 2018 Operating expenses Operating income Division Electronic Brokerage Division Mutual Fund Division Mutual Electronic Investment Fund Brokerage Banking Division Division Division 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Profit Margin Investment Turnover Investment Banking Division % % Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. % ROI % % %

Managerial Accounting
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
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Divisional income statements and return on investment analysis. E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Fee revenue $1,580,000 $1,640,000 $1,570,000 Operating expenses 768,000 689,600 1,109,200 Invested assets 5,800,000 4,800,000 3,200,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: Line Item Description Fee revenue Mutual Fund Operating expenses Operating income Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 2018 Division Electronic Brokerage Division Mutual Fund Division Mutual Electronic Investment Fund Brokerage Banking Division Division Division 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Profit Margin Investment Banking Division % % % Investment Turnover Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. ROI % % %
Transcribed Image Text:Divisional income statements and return on investment analysis. E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Fee revenue $1,580,000 $1,640,000 $1,570,000 Operating expenses 768,000 689,600 1,109,200 Invested assets 5,800,000 4,800,000 3,200,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Required: Line Item Description Fee revenue Mutual Fund Operating expenses Operating income Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 2018 Division Electronic Brokerage Division Mutual Fund Division Mutual Electronic Investment Fund Brokerage Banking Division Division Division 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Profit Margin Investment Banking Division % % % Investment Turnover Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. ROI % % %
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