Question

The vice president of operations of Pavone Company is evaluating the performance of two divisions organized...

The vice president of operations of Pavone Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows:

Business Division

Consumer Division
Sales $2,100,000 $2,480,000
Cost of goods sold 1,250,000 1,330,000
Operating expenses 619,000 852,400
Invested assets 750,000 2,066,667
Required:
1. Prepare condensed divisional income statements for the year ended December 31, assuming that there were no service department charges.
2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. If required, round your final answers to one decimal place.
3. If management wants a minimum acceptable return of 19.00%, determine the residual income for each division. Use the minus sign to indicate a negative income. Round final answers to nearest whole dollar.
4.

Discuss the evaluation of the two divisions, using the performance measures previously determined.

1. Prepare condensed divisional income statements for the year ended December 31, assuming that there were no service department charges.

Pavone Company

Divisional Income Statements

For the Year Ended December 31

1

Business Division

Consumer Division

2

Sales

3

Cost of goods sold

4

Gross profit

5

Operating expenses

6

Income from operations
Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $1,238,400 Purchasing Department 223,500 Other corporate administrative expenses 629,000 Total corporate expense $2,090,900 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $516,000 Purchasing Department 89,600 Other corporate administrative expenses 560,000 Total corporate expense $1,165,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and...
Divisional Income Statements with Service Department Charges Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $516,000 Purchasing Department 89,600 Other corporate administrative expenses 560,000 Total corporate expense $1,165,600 The other corporate administrative expenses include officers' salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on...
Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...
Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $475,600 Purchasing Department 66,000 Other corporate administrative expenses 580,000 Total corporate expense $1,121,600 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department,...
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and...
Grael Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $ 492,000 Purchasing Department 75,600 Other corporate administrative expenses 575,000 Total corporate expense $1,142,600 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the...
Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer...
Red Line Railroad Inc. has three regional divisions organized as profit centers. The chief executive officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues. The following quarterly income and expense accounts were provided from the trial balance as of December 31: Revenues—East $ 884,000 Revenues—West 1,050,000 Revenues—Central 1,870,000 Operating Expenses—East 568,100 Operating Expenses—West 623,520 Operating Expenses—Central 1,170,540 Corporate Expenses—Shareholder Relations 157,000 Corporate Expenses—Customer Support 407,000 Corporate Expenses—Legal 261,000 General Corporate Officers’ Salaries 270,750 The company...
Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company...
Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $1,420,000 $1,470,000 $1,430,000 Operating expenses 764,800 696,000 1,082,000 Invested assets 5,200,000 4,300,000 2,900,000 The management of E.F. Lynch Company is evaluating each division as a...
Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company...
Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Mutual Fund Division Electronic Brokerage Division Investment Banking Division Fee revenue $940,000 $990,000 $960,000 Operating expenses 456,000 415,800 351,600 Invested assets 2,200,000 2,900,000 3,900,000 The management of E.F. Lynch Company is evaluating each division as a...
The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The...
The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Cereal Division Snack Cake Division Retail Bakeries Division Sales $26,300,000 $8,300,000 $9,850,000 Cost of goods sold 16,660,000 5,535,000 6,780,000 Operating expenses 8,325,000 2,018,000 2,282,000 Invested assets 6,575,000 2,766,667 4,925,000 The management of The Crunchy Granola...
Divisional income statements and return on investment analysis The Crunchy Granola Company is a diversified food...
Divisional income statements and return on investment analysis The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Cereal Division                   Snack Cake Division         Retail Bakeries Division Sales                                      $28,000,000                        $8,300,000                           $10,050,000 Cost of goods sold            16,970,000                           5,875,000                             7,095,000 Operating expenses       7,630,000                             2,245,000                             2,572,500 Invested assets                 10,300,000                          ...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT