Sales Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division $6,270,000 $6,580,000 $ Cost of goods sold 2,759,000 3,093,000 Operating expenses 2,382,400 2,434,200 Invested assets 5,700,000 4,700,000 Required: : 1. Prepare condensed divisional income statements for the year ended December 31, 2017, assuming that there were no support department allocations. , , , Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 2017 Road Bike Division Mountain Bike Division Sales Cost of goods sold Gross profit Operating expenses Operating income 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. If required, round your answers to one decimal place. Division Profit Margin Investment Turnover ROI Road Bike Division % Mountain Bike Division % % 3. If management desires a minimum acceptable rate of return of 18%, determine the residual income for each division. Residual Income Road Bike Division Mountain Bike Division Decision on Transfer Pricing Materials used by the Instrument Division of Ziegler Inc. are currently purchased from outside suppliers at a cost of $396 per unit. However, the same materials are available from the Components Division. The Components Division has unused capacity and can produce the materials needed by the Instrument Division at a variable cost of $329 per unit. a. If a transfer price of $360 per unit is established and 42,300 units of materials are transferred, with no reduction in the Components Division's current sales, how much would Ziegler Inc.'s total operating income increase? b. How much would the Instrument Division's operating income increase? C. How much would the Components Division's operating income increase? $ Profit Margin, Investment Turnover, and Return on Investment The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department allocations): Sales $1,386,000 Cost of goods sold (623,700) Gross profit $762,300 Administrative expenses (277,200) Operating income $485,100 The manager of the Consumer Products Division 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 $2,310,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin % Investment turnover Return on investment b. If expenses could be reduced by $69,300 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 Return on investment % Return on investment The operating income and the amount of invested assets in each division Conley Industries are as follows: Operating Income Invested Assets Retail Division $70,400 $320,000 Commercial Division 133,000 700,000 310,000 Internet Division 83.700 a. Compute the return on investment for each division. (Round to the nearest whole percentage.) Division Percent Retail Division % Commercial Division % Internet Division % b. Which division is the most profitable per dollar invested? Internet Division Feedback Check My Work a. Divide income from operations by invested assets. b. Compare the return on investment for each division. The highest percentage is the most profitable per dollar invested. Budgetary Performance for Cost Center Georgia Company's costs were under budget by $58,800. The company is divided into North and South regions. The North Region's costs were under budget by $5,300. Determine the amount that the South Region's costs were over or under budget