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Arlington Clothing, Inc., shows the following information for its two divisions for year 1. Lake Region Coastal Region Sales revenue $ 4,080,000 $ 12,920,000 Cost

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

Lake Region Coastal Region
Sales revenue $ 4,080,000 $ 12,920,000
Cost of sales 2,616,300 6,460,000
Allocated corporate overhead 244,800 775,200
Other general and administration 538,900 3,740,000

The results for year 2 have just been posted.

Lake Region Coastal Region
Sales revenue $ 4,080,000 $ 9,520,000
Cost of sales 2,616,300 4,760,000
Allocated corporate overhead 306,000 714,000
Other general and administration 538,900 3,740,000

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

Compute divisional operating income for the two divisions. (Enter your answers in thousands of dollars rounded to 1 decimal place.)

Lake Region Coastal Region
Operating income

b-2. How well have these divisions performed?

What are the gross margin and operating margin percentages for both divisions? (Enter your answers as a percentage rounded to 2 decimal places (i.e., 32.12).)

Lake Region Coastal Region
Gross margin percentage 35.88 % 50.00 %
Operating margin % %

How well have these divisions performed? (Select all that apply.)

The reported divisional income for the Lake Region went down because sales fell in Coastal Region.checkbox unchecked1 of 6
Corporate overhead is allocated on the basis of relative revenues.checkbox checked2 of 6
Corporate overhead is allocated on the basis of absolute revenues.checkbox unchecked3 of 6
The performance of the Lake Region is affected by the results in the Coastal Region.checkbox unchecked4 of 6
The operating margin is greater in Lake Region.checkbox checked5 of 6
The gross margin percentage is higher in Coastal Region.

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