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E Horizon Foods Inc. is a diversified food products company with three operating divisions organized as investment centers. Condens data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Sales Cost of goods sold Operating expenses Invested assets Required: Line Item Description Sales ✓ Cost of goods sold Gross profit Operating expenses Breakfast Division ✓ Lunch Division Breakfast Division Dinner Division $36,000,000 24,480,000 8,640,000 20,000,000 ✓ The management of Horizon Foods Inc. is evaluating each division as a basis for planning a future expansion of operations. Lunch Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. $16,200,000 Profit Margin 12,312,000 Horizon Foods Inc. Divisional Income Statements For the Year Ended June 30, 20Y7 % 2,916,000 % 9,000,000 % Dinner Division Operating income 2. Using the DuPont formula, compute the profit margin, investment turnover, and return on investment for each division. Round to one decimal place. $20,000,000 13,600,000 Breakfast Division Lunch Division Dinner Division 4,800,000 12,500,000 % Investment Turnover ROI % % % 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Complete the paragraph below. Note: Round any amounts to the nearest cent. Per dollar of invested assets, the Breakfast ✔Division is the most profitable of the three divisions. Assuming that the returns on investment do not change in the future, an expansion of this division will return cents on each dollar of invested assets. Thus, when faced with limited funds for expansion, management should consider the division identified above.

E Horizon Foods Inc. is a diversified food products company with three operating divisions organized as investment centers. Condens data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Sales Cost of goods sold Operating expenses Invested assets Required: Line Item Description Sales ✓ Cost of goods sold Gross profit Operating expenses Breakfast Division ✓ Lunch Division Breakfast Division Dinner Division $36,000,000 24,480,000 8,640,000 20,000,000 ✓ The management of Horizon Foods Inc. is evaluating each division as a basis for planning a future expansion of operations. Lunch Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. $16,200,000 Profit Margin 12,312,000 Horizon Foods Inc. Divisional Income Statements For the Year Ended June 30, 20Y7 % 2,916,000 % 9,000,000 % Dinner Division Operating income 2. Using the DuPont formula, compute the profit margin, investment turnover, and return on investment for each division. Round to one decimal place. $20,000,000 13,600,000 Breakfast Division Lunch Division Dinner Division 4,800,000 12,500,000 % Investment Turnover ROI % % % 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Complete the paragraph below. Note: Round any amounts to the nearest cent. Per dollar of invested assets, the Breakfast ✔Division is the most profitable of the three divisions. Assuming that the returns on investment do not change in the future, an expansion of this division will return cents on each dollar of invested assets. Thus, when faced with limited funds for expansion, management should consider the division identified above.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Horizon Foods Inc. is a diversified food products company with three operating divisions organized as investment centers. Condens data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Sales Cost of goods sold Operating expenses Invested assets Required: Line Item Description Sales ✓ Cost of goods sold Gross profit Operating expenses Breakfast Division ✓ Lunch Division Dinner Division Breakfast Division $36,000,000 24,480,000 ✓ 8,640,000 ✓ 20,000,000 The management of Horizon Foods Inc. is evaluating each division as a basis for planning a future expansion of operations. 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. Lunch Division $16,200,000 Horizon Foods Inc. Divisional Income Statements For the Year Ended June 30, 20Y7 Profit Margin 12,312,000 % 2,916,000 % 9,000,000 % Dinner Division Operating income 2. Using the DuPont formula, compute the profit margin, investment turnover, and return on investment for each division. Round to one decimal place. $20,000,000 13,600,000 Breakfast Division Lunch Division Dinner Division 4,800,000 12,500,000 % Investment Turnover ROI % % % 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Complete the paragraph below. Note: Round any amounts to the nearest cent. Per dollar of invested assets, the Breakfast ✔Division is the most profitable of the three divisions. Assuming that the returns on investment do not change in the future, an expansion of this division will return cents on each dollar of invested assets. Thus, when faced with limited funds for expansion, management should consider the division identified above.
Transcribed Image Text:Horizon Foods Inc. is a diversified food products company with three operating divisions organized as investment centers. Condens data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Sales Cost of goods sold Operating expenses Invested assets Required: Line Item Description Sales ✓ Cost of goods sold Gross profit Operating expenses Breakfast Division ✓ Lunch Division Dinner Division Breakfast Division $36,000,000 24,480,000 ✓ 8,640,000 ✓ 20,000,000 The management of Horizon Foods Inc. is evaluating each division as a basis for planning a future expansion of operations. 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. Lunch Division $16,200,000 Horizon Foods Inc. Divisional Income Statements For the Year Ended June 30, 20Y7 Profit Margin 12,312,000 % 2,916,000 % 9,000,000 % Dinner Division Operating income 2. Using the DuPont formula, compute the profit margin, investment turnover, and return on investment for each division. Round to one decimal place. $20,000,000 13,600,000 Breakfast Division Lunch Division Dinner Division 4,800,000 12,500,000 % Investment Turnover ROI % % % 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Complete the paragraph below. Note: Round any amounts to the nearest cent. Per dollar of invested assets, the Breakfast ✔Division is the most profitable of the three divisions. Assuming that the returns on investment do not change in the future, an expansion of this division will return cents on each dollar of invested assets. Thus, when faced with limited funds for expansion, management should consider the division identified above.
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