Item1

5points

eBook

Print

References

Check my workCheck My Work button is now enabled3

Item 1

Arlington Clothing, Inc., shows the following information for its two divisions for year 1.

	Lake Region			Coastal Region
Sales revenue	$	4,180,000		$	12,980,000
Cost of sales		2,610,000			6,520,000
Allocated corporate overhead		250,800			778,800
Other general and administration		550,900			3,720,000

The results for year 2 have just been posted.

	Lake Region			Coastal Region
Sales revenue	$	4,180,000		$	9,800,000
Cost of sales		2,610,000			4,770,000
Allocated corporate overhead		313,500			735,000
Other general and administration		539,000			3,720,000

Required:

a. Compute divisional operating income for the two divisions for year 2.

b-1. What are the gross margin and operating margin percentages for year 2 for both divisions?

b-2. How well have these divisions performed?