QUESTION -123 The condensed income statement for the Consumer Products Division of Milner Industries Inc. is as follows: Sales $7,000,000 Cost of goods sold = $4,500,000 Gross profit = $2,500,000 Administrative expenses = $750,000 Income from operations = $1,750,000 The manager of the Consumer Products Division is considering ways to increase the rate of return on investments a) Using the DuPont Formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment of the Consumer Products Division, assuming that $5,000,000 of assets have been invested in the Consumer Products Division. b) If expenses could be reduced by $350,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the Consumer Products Division?
QUESTION -123 The condensed income statement for the Consumer Products Division of Milner Industries Inc. is as follows: Sales $7,000,000 Cost of goods sold = $4,500,000 Gross profit = $2,500,000 Administrative expenses = $750,000 Income from operations = $1,750,000 The manager of the Consumer Products Division is considering ways to increase the rate of return on investments a) Using the DuPont Formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment of the Consumer Products Division, assuming that $5,000,000 of assets have been invested in the Consumer Products Division. b) If expenses could be reduced by $350,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the Consumer Products Division?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:QUESTION -123
The condensed income statement for the Consumer Products Division of Milner Industries
Inc. is as follows:
Sales $7,000,000
Cost of goods sold = $4,500,000
Gross profit = $2,500,000
Administrative expenses = $750,000
Income from operations = $1,750,000
The manager of the Consumer Products Division is considering ways to increase the rate of
return on investments
a) Using the DuPont Formula for rate of return on investment, determine the profit margin,
investment turnover, and rate of return on investment of the Consumer Products Division,
assuming that $5,000,000 of assets have been invested in the Consumer Products Division.
b) If expenses could be reduced by $350,000 without decreasing sales, what would be the
impact on the profit margin, investment turnover, and rate of return on investment for the
Consumer Products Division?
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