1. Divisional Performance Analysis and Evaluation

   The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the fixed assets available to the center.investment centers. Invested assets and condensed income statement data for the past year for each division are as follows:

   	Road Bike Division		Mountain Bike Division
   Sales	$ 4,620,000		$ 4,900,000
   Cost of goods sold	2,033,000		2,303,000
   Operating expenses	1,801,600		1,862,000
   Invested assets	4,200,000		3,500,000

   Required:

   1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no The costs of services provided by an internal service department and transferred to a responsibility center.service department charges.

   Free Ride Bike Company
   Divisional Income Statements
   For the Year Ended December 31, 20Y7
   	Road Bike Division	Mountain Bike Division
   Sales	$	$
   Cost of goods sold
   Gross profit	$	$
   Operating expenses
   Income from operations	$	$

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

   Division	Profit Margin	Investment Turnover	ROI
   Road Bike Division	%		%
   Mountain Bike Division	%		%

   3. If management desires a minimum acceptable return of 18%, determine the The excess of divisional income from operations over a minimum acceptable income from operations.residual income for each division. If required, use the minus sign to indicate a negative income.

   Division	Residual Income
   Road Bike Division	$
   Mountain Bike Division	$

4. On the basis of income from operations, the _____ Division is the more profitable of the two divisions. However, income from operations ______ consider the amount of invested assets in each division. On the basis of residual income, the _____ Division is the more profitable of the two divisions.