Business, 26.02.2020 06:01 dianaskye9081
The Whole Life Baked Goods 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, 2017, are as follows:
Cereal Division Snack Cake Division Retail Bakeries Division
Sales $17,600,000 $18,000,000 $9,520,000 Cost of goods sold 10,600,000 12,550,000 6,630,000 Operating expenses 6,120,000 4,730,000 2,318,800 Invested assets 8,000,000 6,000,000 6,800,000
The management of The Whole Life Baked Goods Company is evaluating each division as a basis for planning a future expansion of operations.
Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.
2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. If required, round your final answer to one decimal place.
3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion?
Answers: 1
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