Question
Health Quest operates fitness centers and organizes its operations into three geographical areas: Western, Midwestern, and Eastern Divisions. The following shows Health Quests divisional income
Health Quest operates fitness centers and organizes its operations into three geographical areas: Western, Midwestern, and Eastern Divisions. The following shows Health Quests divisional income statements from last year.
| WesternDivision | MidwesternDivision | EasternDivision |
Total |
Sales | $2,800,000 | $2,226,000 | $3,391,060 | $8,417,060 |
Cost of sales | 1,497,000 | 1,201,000 | 1,648,059 | 4,346,059 |
Gross margin | 1,303,000 | 1,025,000 | 1,743,001 | 4,071,001 |
Operating expenses | 503,000 | 385,000 | 663,000 | 1,551,000 |
Allocated corporate overhead | 228,571 | 182,857 | 308,572 | 720,000 |
Operating income | 571,429 | 457,143 | 771,429 | 1,800,001 |
Income tax (30%) | 171,429 | 137,143 | 231,429 | 540,001 |
After-tax income | $ 400,000 | $ 320,000 | $ 540,000 | $1,260,000 |
|
|
|
|
|
Required:
Calculate the gross margin ratio, the operating margin ratio, and the profit margin ratio for the three divisions of Health Quest.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started