Using the information above, what is the profit margin for each division? Using the information above, what is the return on investment for each division? Using the information above, what is the residual income for each division?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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XSport Fitness is organized as a decentralized organization. They have 2 divisions we need to
scrutinize. The aerobics division and the strength division. Each one reports the following:
Actual
Strength
Sales
$4,000,000
$5,000,000
Cost of Goods Sold
Selling, General and Administrative
$2,500,000
$450,000
$1,000,000
$1,500,000
Invested Assets
8,000,000
26,000,000
Minimum Return on Investment Desired
10%
10%
Headcount in Department
500
500
Using the information above, what is the profit margin for each division?
Using the information above, what is the return on investment for each division?
Using the information above, what is the residual income for each division?
Transcribed Image Text:XSport Fitness is organized as a decentralized organization. They have 2 divisions we need to scrutinize. The aerobics division and the strength division. Each one reports the following: Actual Strength Sales $4,000,000 $5,000,000 Cost of Goods Sold Selling, General and Administrative $2,500,000 $450,000 $1,000,000 $1,500,000 Invested Assets 8,000,000 26,000,000 Minimum Return on Investment Desired 10% 10% Headcount in Department 500 500 Using the information above, what is the profit margin for each division? Using the information above, what is the return on investment for each division? Using the information above, what is the residual income for each division?
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