divisional operating income

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
Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...
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A. Compute divisional operating income for the two divisions. Ignore taxes. B-1. What are the gross margin and operating margin percentages for both divisions? B-2. How well have these division performed?
**Arlington Clothing, Inc. Divisional Information for Year 1**

**Financial Overview:**
- **Lake Region:**
  - Sales Revenue: $4,070,000
  - Cost of Sales: $2,646,300
  - Allocated Corporate Overhead: $244,200
  - Other General and Administration: $544,900

- **Coastal Region:**
  - Sales Revenue: $12,980,000
  - Cost of Sales: $6,490,000
  - Allocated Corporate Overhead: $778,800
  - Other General and Administration: $3,746,000

**Requirements:**
- **(a)** Compute divisional operating income for the two divisions. Ignore taxes.
- **(b-1)** Determine the gross margin and operating margin percentages for both divisions.
- **(b-2)** Evaluate the performance of these divisions.

**Data Entry Section:**
- **Compute divisional operating income:** Enter answers in thousands of dollars, rounded to 1 decimal place.

The webpage includes an input table for operating income calculations for both the Lake Region and Coastal Region. There are tabs labeled **Req A, Req B1, Req B2** for different requirements to be completed.
Transcribed Image Text:**Arlington Clothing, Inc. Divisional Information for Year 1** **Financial Overview:** - **Lake Region:** - Sales Revenue: $4,070,000 - Cost of Sales: $2,646,300 - Allocated Corporate Overhead: $244,200 - Other General and Administration: $544,900 - **Coastal Region:** - Sales Revenue: $12,980,000 - Cost of Sales: $6,490,000 - Allocated Corporate Overhead: $778,800 - Other General and Administration: $3,746,000 **Requirements:** - **(a)** Compute divisional operating income for the two divisions. Ignore taxes. - **(b-1)** Determine the gross margin and operating margin percentages for both divisions. - **(b-2)** Evaluate the performance of these divisions. **Data Entry Section:** - **Compute divisional operating income:** Enter answers in thousands of dollars, rounded to 1 decimal place. The webpage includes an input table for operating income calculations for both the Lake Region and Coastal Region. There are tabs labeled **Req A, Req B1, Req B2** for different requirements to be completed.
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