1. Profit Margin, Investment Turnover, and return on investment

   The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges):

   Sales	$1,146,000
   Cost of goods sold	515,700
   Gross profit	$630,300
   Administrative expenses	343,800
   Income from operations	$286,500

   The manager of the Consumer Products Division is considering ways to increase the return on investment.

   a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,910,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place.

   Profit margin	%
   Investment turnover
   Rate of return on investment	%

   b. If expenses could be reduced by $57,300 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? Round the investment turnover to one decimal place.

   Profit margin	%
   Investment turnover
   Rate of return on investment	%

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