Obj. 4 P14-3 Divisional income statements and return on investment analysis High Country Foods Inc. is a diversified food products company with three operating divi- sions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Breakfast Bakery Frozen Foods V 2. Breakfast Division, ROI, Division Division Division 10.8% Sales $39,600,000 $18,500,000 $24,000,000 Cost of goods sold Operating expenses 32,500,000 13,500,000 14,400,000 4,724,000 3,705,000 7,680,000 Invested assets 22,000,000 9,250,000 16,000,000 The management of High Country Foods Inc. is evaluating each division as a basis for planning a future expansion of operations. Instructions 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. 2. Using the DuPont formula, compute the profit margin, investment turnover, and return on investment for each division. 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Explain.

Obj. 4 P14-3 Divisional income statements and return on investment analysis High Country Foods Inc. is a diversified food products company with three operating divi- sions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y7, are as follows: Breakfast Bakery Frozen Foods V 2. Breakfast Division, ROI, Division Division Division 10.8% Sales $39,600,000 $18,500,000 $24,000,000 Cost of goods sold Operating expenses 32,500,000 13,500,000 14,400,000 4,724,000 3,705,000 7,680,000 Invested assets 22,000,000 9,250,000 16,000,000 The management of High Country Foods Inc. is evaluating each division as a basis for planning a future expansion of operations. Instructions 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges. 2. Using the DuPont formula, compute the profit margin, investment turnover, and return on investment for each division. 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Explain.

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.3.1P

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