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 4d16a6fc6064fb3_1	$fill in the blank 4d16a6fc6064fb3_2	$fill in the blank 4d16a6fc6064fb3_3
Cost of goods sold	fill in the blank 4d16a6fc6064fb3_4	fill in the blank 4d16a6fc6064fb3_5	fill in the blank 4d16a6fc6064fb3_6
Gross profit	$fill in the blank 4d16a6fc6064fb3_7	$fill in the blank 4d16a6fc6064fb3_8	$fill in the blank 4d16a6fc6064fb3_9
Operating expenses	fill in the blank 4d16a6fc6064fb3_10	fill in the blank 4d16a6fc6064fb3_11	fill in the blank 4d16a6fc6064fb3_12
Operating income	$fill in the blank 4d16a6fc6064fb3_13	$fill in the blank 4d16a6fc6064fb3_14	$fill in the blank 4d16a6fc6064fb3_15

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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 5123eff1ef99f9f_1 %	fill in the blank 5123eff1ef99f9f_2	fill in the blank 5123eff1ef99f9f_3 %
Snack Cake Division	fill in the blank 5123eff1ef99f9f_4 %	fill in the blank 5123eff1ef99f9f_5	fill in the blank 5123eff1ef99f9f_6 %
Retail Bakeries Division	fill in the blank 5123eff1ef99f9f_7 %	fill in the blank 5123eff1ef99f9f_8	fill in the blank 5123eff1ef99f9f_9 %

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