The condensed income statement for the Domestic Division of Fahkahany Industries Inc. is as follows (assuming no service department charges):

The manager of the Domestic Division is considering ways to increase the rate of return on investment.
a. Using the DuPont formula for rate of return on investment, determine the profit margin, investment turnover, and rate of return on investment of the Domestic Division, assuming that $3,750,000 of assets have been invested in the Domestic Division.
b. If expenses could be reduced by $450,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and rate of return on investment for the Domestic Division?

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Sales Cost of goods sold $4,500,000 Gross profit Administrative expenses Income from operations $1,889,000 539,000 $1,350,000