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Operating Income For Segments

Xenold, Inc., manufactures and sells cooktops and ovens through three divisions: Home, Restaurant, and Specialty. Each division is evaluated as a profit center. Data for each division for last year are as follows (numbers in thousands):

	Home	Restaurant	Specialty
Sales	$4,130	$3,600	$2,550
Cost of goods sold	2,900	2,620	1,700
Selling and administrative expenses	950	410	320

The income tax rate for Xenold, Inc., is 40 percent. Xenold, Inc., has two sources of financing: bonds paying 5 percent interest, which account for 25 percent of total investment, and equity accounting for the remaining 75 percent of total investment. Xenold, Inc., has been in business for over 15 years and is considered a relatively stable stock, despite its link to the cyclical construction industry. As a result, Xenold stock has an opportunity cost of 5 percent over the 4 percent long-term government bond rate. Xenolds total capital employed is $5.15 million ($2,700,000 for the Home Division, $1,700,000 for the Restaurant Division, and the remainder for the Specialty Division).

Required:

1. Prepare a segmented income statement for Xenold, Inc., for last year. Enter the amounts in thousands.

Xenold, Inc. Income Statement (in thousands) For the Year 20XX

	Home	Restaurant	Specialty	Total
Sales	$fill in the blank 43eae2ff8039fcc_1	$fill in the blank 43eae2ff8039fcc_2	$fill in the blank 43eae2ff8039fcc_3	$fill in the blank 43eae2ff8039fcc_4
Cost of goods sold	fill in the blank 43eae2ff8039fcc_5	fill in the blank 43eae2ff8039fcc_6	fill in the blank 43eae2ff8039fcc_7	fill in the blank 43eae2ff8039fcc_8
Gross profit	$fill in the blank 43eae2ff8039fcc_9	$fill in the blank 43eae2ff8039fcc_10	$fill in the blank 43eae2ff8039fcc_11	$fill in the blank 43eae2ff8039fcc_12
Selling and administrative expense	fill in the blank 43eae2ff8039fcc_13	fill in the blank 43eae2ff8039fcc_14	fill in the blank 43eae2ff8039fcc_15	fill in the blank 43eae2ff8039fcc_16
Division profit	$fill in the blank 43eae2ff8039fcc_17	$fill in the blank 43eae2ff8039fcc_18	$fill in the blank 43eae2ff8039fcc_19	$fill in the blank 43eae2ff8039fcc_20
Income taxes	fill in the blank 43eae2ff8039fcc_21	fill in the blank 43eae2ff8039fcc_22	fill in the blank 43eae2ff8039fcc_23	fill in the blank 43eae2ff8039fcc_24
After-tax income	$fill in the blank 43eae2ff8039fcc_25	$fill in the blank 43eae2ff8039fcc_26	$fill in the blank 43eae2ff8039fcc_27	$fill in the blank 43eae2ff8039fcc_28

Feedback

1. A segmented income statement shows the net income for each business segment.

2. Calculate Xenolds weighted average cost of capital. Enter your answer as a decimal value rounded to three places. For example, 4.36% would be entered as ".044". Round your calculations to four decimal places. fill in the blank 00e61afff012fcc_1

3. Calculate EVA for each division and for Xenold, Inc. In your computations, carry the weighted average cost of capital to three decimal places. If the EVA is negative, enter your answer as a negative amount. Enter amounts as whole dollars not in thousands.

	EVA
Home	$ fill in the blank 00e61afff012fcc_2
Restaurant	$ fill in the blank 00e61afff012fcc_3
Specialty	$ fill in the blank 00e61afff012fcc_4
Total	$ fill in the blank 00e61afff012fcc_5