Question
Pool Accessories, Inc., has two divisionsFurniture and Supplies. The following segmented financial information is for the most recent fiscal year ended December 31. Furniture Division
Pool Accessories, Inc., has two divisionsFurniture and Supplies. The following segmented financial information is for the most recent fiscal year ended December 31.
Furniture Division | Supplies Division | |
Sales | $3,000,000 | $1,000,000 |
Cost of goods sold | 1,600,000 | 430,000 |
Allocated overhead | 375,000 | 125,000 |
Selling and administrative expenses | 250,000 | 200,000 |
Average net operating assets | $8,500,000 | 2,100,000 |
Assume for both divisions that the tax rate is 30 percent, and the cost of capital is 8%.
Answer the following questions:
Complete the following segmented income statement and calculate the profit margin ratio for each division at the bottom of the segmented income statement.
| Furniture Division | Supplies Division |
Sales | $ | $ |
COGS |
|
|
Gross margin | $ | $ |
|
|
|
Allocated overhead |
|
|
Selling and administrative expenses |
|
|
Operating income | $ | $ |
|
|
|
Income tax expense (30% of op income) |
|
|
Net Income | $ |
What is the profit margin ratio for the two divisions (round to the nearest integer)? Furniture: %; Supplies: %
What is the ROI for the two divisions (round to the nearest integer)? Furniture: %; Supplies: %
What is the RI for the two divisions (separate thousands with comma)? Furniture: $ ; Supplies: $
What is the EVA for the two divisions (For the EVA calculation, the only adjustment to be made to net income is to deduct taxes. No adjustments are required for assets; separate thousands with comma. Display negative value in parentheses)? Furniture: $ ; Supplies: $
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