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Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Frozen Foods Division: Year 1 Year 2
Allard, Inc., presented two years of data for its Frozen Foods Division and its Canned Foods Division. Frozen Foods Division: Year 1 Year 2 Sales Operating income $35,700,000 1,360,000 $37,600,000 1,580,000 Average operating assets 6,770,000 6,770,000 Canned Foods Division: Year 1 Year 2 Sales Operating income Average operating assets $11,900,000 $12,500,000 640,000 5,950,000 580,000 5,950,000 At the end of Year 2, the manager of the Canned Foods Division is concerned about the division's performance. As a result, he is considering the opportunity to invest in two independent projects. The first is juice boxes for elementary school children. The second is fruit and veggie pouches for kids on the go. Without the investments, the division expects that Year 2 data will remain unchanged. The expected operating incomes and the outlay required for each investment are as follows: Operating income Outlay Juice Box Fruit Pouch $28,000 200,000 $15,500 150,000
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