Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear and Women’s Wear. For the past year, the Women’s Wear division had the following ratios: Return on Investment 27% Profit Margin 15% Investment Turnover 1.8 The following data relates to the Men’s Wear division for the past year. Sales $18,000,000 Cost of goods sold $12,000,000 Operating expenses $4,200,000 Invested assets $10,000,000 Question A) Fashion Forward awards bonuses to divisional mangers equal to $4,000 for each percentage point by which divisional ROI exceeds 12%. Calculate the bonus that the Men’s Wear division manager received last year. (show work) Question B) Calculate the profit margin for the Men’s Wear division for the past year. (show work)
Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear and Women’s Wear.
For the past year, the Women’s Wear division had the following ratios:
Profit Margin 15%
Investment Turnover 1.8
The following data relates to the Men’s Wear division for the past year.
Sales $18,000,000
Cost of goods sold $12,000,000
Operating expenses $4,200,000
Invested assets $10,000,000
Question A) Fashion Forward awards bonuses to divisional mangers equal to $4,000 for each percentage point by which divisional ROI exceeds 12%. Calculate the bonus that the Men’s Wear division manager received last year. (show work)
Question B) Calculate the profit margin for the Men’s Wear division for the past year. (show work)
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