Managerial accounting

PR 24-5A Divisional performance analysis and evaluation The vice president of operations of Pavone Company is evaluating the The vice president of operations of Pavone 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: OBJ.4 Business Division Consumer Division Sales Cost of goods sold Operating expenses Invested assets $2,500,000 1,320,000 930,000 1,250,000 $2,550,000 1,350,000 843,000 2,125,000 Instructions 1. Prepare condensed divisional income statements for the year ended December 31, 2014, assuming that there were no service department charges. Using the DuPont formula for rate of return on investment, determine the profit mar 2. in, investment turnover, and rate of return on investment for each division. gin, i residual income for each division. determined in parts (D, (2), and (3) 3. If management desires a minimum acceptable rate of return of 17%, determine the 4Discuss the evaluation of the two divisions, using the performance measures