Road Bike Division	Mountain Bike Division
Sales	$1,870,000	$1,950,000
Cost of goods sold	823,000	917,000
Operating expenses	691,700	701,500
Invested assets	1,700,000	1,500,000

Required:

1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations.

.

Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations.

Road Bike Mountain Bike Division Division Line Item Description Sales Cost of goods sold Gross profit Operating expenses Operating income \begin{tabular}{llll} Division & Profit Margin & Investment Turnover & ROI \\ \hline Road Bike Division & & & \\ Mountain Bike Division & & & \\ & & & \end{tabular} 3. If management desires a minimum acceptable rate of return of 15%, determine the residual income for each division. \begin{tabular}{lc} & Residual Income \\ \hline Road Bike Division & $ \\ Mountain Bike Division & $ \end{tabular} 4. On the basis of operating income, the Division is the more profitable of the two divisions. However, operating income consider the amount of invested assets in each division. On the basis of residual income, the Division is the more profitable of the two divisions