Problem#12:Profitability&CostAnalysis Car Deals Inc. has two divisions: New Cars and Used Cars. The following segmented financial information is for the most recent fiscal year: New Cars Used Cars Division Division Sales Cost of goods sold Allocated overhead Selling and administrative expenses $9,000,000 3,300,000 1,050,000 585,000 $18,000,000 8,700,000 2,550,000 630,000 The New Cars division had average operating assets totaling $17,400,000 for the year, and the Used Cars division had average operating assets of $22,800,000. Assume the cost of capital rate is 15%, and the company's tax rate is 40%. Required: a. Prepare a segmented income statement, including the profit margin ratio for each division at the bottom of the segmented income statement Calculate return on investment (ROI) for each division. Calculate residual income for each division. Summarize the answers to parts a, b, and c. What does this information tell you about each division? b. c. Page 13 of 14