Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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 $1,848,000
Cost of goods sold 831,600
Gross profit $1,016,400
Administrative expenses 646,800
Income from operations $369,600

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 $3,080,000 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 $92,400 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 _____%

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

Students also viewed these Accounting questions