Divisional Income Statements and Return on Investment Analysis The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 2017, are as follows: Cereal Division Snack Cake Division Retail Bakeries Division Sales Cost of goods sold $25,000,000 16,670,000 7,330,000 10,000,000 $8,000,000 5,575,000 1,945,000 4,000,000 $9,750,000 6,795,000 2,272,500 Operating expenses Invested assets 6,500,000 The management of The Crunchy Granola Company is evaluating each division as a basis for planning a future expansion of operations. Required: 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations. The Crunchy Granola Company Divisional Income Statements For the Year Ended June 30, 2017 Retail Cereal Snack Cake Bakeries Division Division Division Sales s 25.100,000 s 3,000,000 $ 9,750,000 Cost of goods sold 16,670,000 3575,000 6,795.000 Gross profit Operating expenses Operating income Feedback Check My World 1. For each division, subtract operating expenses from sales. 2. Using the DuPont formula for return on investment, compute the profit margin, investment tumover, and retum on investment for each division. If required, round your answers to onc decimal place. Division Profit Margin Investment Turnover ROI Cereal Division Snack Cake Division 46 Retail Bakeries Division 96 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. Feedback Check My Work 2. Operating income divided by sales equals prafit margin. Sales divided by invested assets cquals investment turnaver. Multiply these two values for the rate of return. 3. Consider which division is the most profitable. Look at investment turnover and the impact of expansion on the company