Divisional Income Statements and Return on Investment Analysis

The Whole Life Baked Goods 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 DivisionRetail Bakeries DivisionSales$17,600,000 $18,000,000 $9,520,000 Cost of goods sold10,600,000 12,550,000 6,630,000 Operating expenses6,120,000 4,730,000 2,318,800 Invested assets8,000,000 6,000,000 6,800,000

The management of The Whole Life Baked Goods 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 service department cost allocations.

Cereal Division Snack Cake DivisionRetail Bakeries DivisionSales$$$Cost of goods sold Gross profit$$$Operating expenses Income from operations$$$

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

DivisionProfit MarginInvestment TurnoverROICereal Division% %Snack Cake Division% %Retail Bakeries Division% %