XSport Fitness is organized as a decentralized organization. They have 2 divisions we need toscrutinize. The aerobics division and the strength division. Each one reports the following:ActualStrengthSales$4,000,000$5,000,000Cost of Goods SoldSelling, General and Administrative$2,500,000$450,000$1,000,000$1,500,000Invested Assets8,000,00026,000,000Minimum Return on Investment Desired10%10%Headcount in Department500500Using 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?

Particulars Aerobics Division Strength Division Sales $4000000 $5000000 (-) Cost of Goods Sold…

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?

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

Section: Chapter Questions

Problem 1Q

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Question

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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