Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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: $

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Accounting

Authors: Joe Ben Hoyle, Timothy S. Doupnik, Thomas F. Schaefer, Oe Ben Hoyle

9th Edition

007337945X, 978-0073379456

More Books

Students also viewed these Accounting questions