Segmented Net Income, Return on Investment (ROI), and Residual Income (RI); Making Investment Decisions. Lathrop Fishing Reels, Inc., has two divisions-Fly and Cast. The Following segmented financial information is for the most recent fiscal year:

	Fly Division	Cast Division
Sales	$6,000,000	$10,000,000
Cost of Goods Sold	2,500,000	4,000,000
Allocated Overhead	375,000	625,000
Selling and administrative expenses	2,100,000	3,950,000

The Fly Division had average operating assets totaling $5,700,000 for the year, and the Cast division had average operating assets of $9,600,000 for the year. Assume the cost of capital rate is 10 percent, and the companys tax rate is 30 percent.

1. Prepare a segmented income statement using the format presented in Figure 11.3. Include the profit margin ratio for each division at the bottom of the segmented income statement.
2. Calculate return on investment for each division
3. Calculate residual income for each division.
4. Summarize the answers to parts A, B, and C using the format presented in figure 11.11. What does this information tell us about each division?