The condensed income statement for the International Division of King Industries Inc. is as follows (assuming no service department charges): Sales $1,200,000 Cost of goods sold 600,000 Gross profit $600,000 Administrative expenses 300,000 Income from operations $300,000 The manager of the International Division is considering ways to increase the rate of return on investment. 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 International Division, assuming that $2,000,000 of assets have been invested in the International Division. b. If expenses could be reduced by $60,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the International Division?

The condensed income statement for the International Division of King Industries Inc. is as follows (assuming no service department charges): Sales $1,200,000 Cost of goods sold 600,000 Gross profit $600,000 Administrative expenses 300,000 Income from operations $300,000 The manager of the International Division is considering ways to increase the rate of return on investment. 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 International Division, assuming that $2,000,000 of assets have been invested in the International Division. b. If expenses could be reduced by $60,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the International Division?

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 13E: The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as...

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