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, 20Y7, are as follows:

	Cereal Division		Snack Cake Division		Retail Bakeries Division
Sales	$25,000,000		$8,000,000		$9,750,000
Cost of goods sold	16,670,000		5,575,000		6,795,000
Operating expenses	7,330,000		1,945,000		2,272,500
Invested assets	10,000,000		4,000,000		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, 20Y7
	Cereal Division	Snack Cake Division	Retail Bakeries Division
Sales	$fill in the blank aeb9a0fa9f97032_1	$fill in the blank aeb9a0fa9f97032_2	$fill in the blank aeb9a0fa9f97032_3
Cost of goods sold	fill in the blank aeb9a0fa9f97032_4	fill in the blank aeb9a0fa9f97032_5	fill in the blank aeb9a0fa9f97032_6
Gross profit	$fill in the blank aeb9a0fa9f97032_7	$fill in the blank aeb9a0fa9f97032_8	$fill in the blank aeb9a0fa9f97032_9
Operating expenses	fill in the blank aeb9a0fa9f97032_10	fill in the blank aeb9a0fa9f97032_11	fill in the blank aeb9a0fa9f97032_12
Operating income	$fill in the blank aeb9a0fa9f97032_13	$fill in the blank aeb9a0fa9f97032_14	$fill in the blank aeb9a0fa9f97032_15

2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. If required, round your answers to one decimal place.

Division	Profit Margin	Investment Turnover	ROI
Cereal Division	fill in the blank ac2a1eff4f89040_1 %	fill in the blank ac2a1eff4f89040_2	fill in the blank ac2a1eff4f89040_3 %
Snack Cake Division	fill in the blank ac2a1eff4f89040_4 %	fill in the blank ac2a1eff4f89040_5	fill in the blank ac2a1eff4f89040_6 %
Retail Bakeries Division	fill in the blank ac2a1eff4f89040_7 %	fill in the blank ac2a1eff4f89040_8	fill in the blank ac2a1eff4f89040_9 %

3. When faced with limited funds for expansion, management should consider an expansion of the _____ Division first.