Divisional performance analysis and evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Mountain Bike Division Division Sales $2,970,000 $3,220,000 Cost of goods sold 1,307,000 1,513,000 Operating expenses 1,128,400 1,191,800 2,700,000 2,300,000 Invested assets Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Mountain Bike Division Division Line Item Description Sales 2,970,000 $ 3,220,000 Cost of goods sold 1,307,000 1,513,000 Gross profit 1,663,000 1,707,000 Operating expenses 1,128,400 1,191,800 Operating income 534,600 515,200 Feedback Check My Work 1. For each division, subtract operating expenses from gross profit. 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. If required, round your answers to one decimal place. Profit Margin Division Road Bike Division Mountain Bike Division % % Investment Turnover ROI % % 3. If management desires a minimum acceptable rate of return of 16%, determine the residual income for each division. Road Bike Division Mountain Bike Division Residual Income 4. On the basis of operating income, the the more profitable of the two divisions. Division is the more profitable of the two divisions. However, operating income consider the amount of invested assets in each division. On the basis of residual income, the