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	$4,140	$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. 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:

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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 1d541af9bfe004c_1	$fill in the blank 1d541af9bfe004c_2	$fill in the blank 1d541af9bfe004c_3	$fill in the blank 1d541af9bfe004c_4
Cost of goods sold	fill in the blank 1d541af9bfe004c_5	fill in the blank 1d541af9bfe004c_6	fill in the blank 1d541af9bfe004c_7	fill in the blank 1d541af9bfe004c_8
Gross profit	$fill in the blank 1d541af9bfe004c_9	$fill in the blank 1d541af9bfe004c_10	$fill in the blank 1d541af9bfe004c_11	$fill in the blank 1d541af9bfe004c_12
Selling and administrative expense	fill in the blank 1d541af9bfe004c_13	fill in the blank 1d541af9bfe004c_14	fill in the blank 1d541af9bfe004c_15	fill in the blank 1d541af9bfe004c_16
Division profit	$fill in the blank 1d541af9bfe004c_17	$fill in the blank 1d541af9bfe004c_18	$fill in the blank 1d541af9bfe004c_19	$fill in the blank 1d541af9bfe004c_20
Income taxes	fill in the blank 1d541af9bfe004c_21	fill in the blank 1d541af9bfe004c_22	fill in the blank 1d541af9bfe004c_23	fill in the blank 1d541af9bfe004c_24
After-tax income	$fill in the blank 1d541af9bfe004c_25	$fill in the blank 1d541af9bfe004c_26	$fill in the blank 1d541af9bfe004c_27	$fill in the blank 1d541af9bfe004c_28

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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 5cab990f3fb4fe5_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 5cab990f3fb4fe5_2
Restaurant	$ fill in the blank 5cab990f3fb4fe5_3
Specialty	$ fill in the blank 5cab990f3fb4fe5_4
Total	$ fill in the blank 5cab990f3fb4fe5_5