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	2,640	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. Xenold's 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 10571d0f5fbb066_1	$fill in the blank 10571d0f5fbb066_2	$fill in the blank 10571d0f5fbb066_3	$fill in the blank 10571d0f5fbb066_4
Cost of goods sold	fill in the blank 10571d0f5fbb066_5	fill in the blank 10571d0f5fbb066_6	fill in the blank 10571d0f5fbb066_7	fill in the blank 10571d0f5fbb066_8
Gross profit	$fill in the blank 10571d0f5fbb066_9	$fill in the blank 10571d0f5fbb066_10	$fill in the blank 10571d0f5fbb066_11	$fill in the blank 10571d0f5fbb066_12
Selling and administrative expense	fill in the blank 10571d0f5fbb066_13	fill in the blank 10571d0f5fbb066_14	fill in the blank 10571d0f5fbb066_15	fill in the blank 10571d0f5fbb066_16
Division profit	$fill in the blank 10571d0f5fbb066_17	$fill in the blank 10571d0f5fbb066_18	$fill in the blank 10571d0f5fbb066_19	$fill in the blank 10571d0f5fbb066_20
Income taxes	fill in the blank 10571d0f5fbb066_21	fill in the blank 10571d0f5fbb066_22	fill in the blank 10571d0f5fbb066_23	fill in the blank 10571d0f5fbb066_24
After-tax income	$fill in the blank 10571d0f5fbb066_25	$fill in the blank 10571d0f5fbb066_26	$fill in the blank 10571d0f5fbb066_27	$fill in the blank 10571d0f5fbb066_28

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

2. Calculate Xenold's 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 d34796f52fe4019_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 d34796f52fe4019_2
Restaurant	$ fill in the blank d34796f52fe4019_3
Specialty	$ fill in the blank d34796f52fe4019_4
Total	$ fill in the blank d34796f52fe4019_5