Arlington Clothing, Inc., shows the following information for its two divisions for year 1.

	Lake Region			Coastal Region
Sales revenue	$	4,100,000		$	13,070,000
Cost of sales		2,695,000			6,475,000
Allocated corporate overhead		246,000			784,200
Other general and administration		544,900			3,770,000

The results for year 2 have just been posted.

	Lake Region			Coastal Region
Sales revenue	$	4,100,000		$	9,680,000
Cost of sales		2,695,000			4,900,000
Allocated corporate overhead		307,500			726,000
Other general and administration		549,000			3,770,000

Required:

a. Compute divisional operating income for the two divisions for year 2.

b-1. What are the gross margin and operating margin percentages for year 2 for both divisions?

b-2. How well have these divisions performed?