The Crunchy Granola Company is a diversified food company that specializes in all natural foods. The company has three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 2016, are as follows:

	Cereal Division	Snack Cake Division	Retail Bakeries Division
Sales	$26,100,000	$8,220,000	$9,900,000
Cost of goods sold	16,650,000	5,555,000	6,755,000
Operating expenses	8,406,000	2,007,400	2,650,000
Invested assets	6,525,000	2,055,000	6,600,000

The management of The Crunchy Granola Company is evaluating each division as a basis for planning a future expansion of operations.

	Required:
1.	Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.
2.	Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. If required, round your final answer to one decimal place.
3.	If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion?

1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.

THE CRUNCHY GRANOLA COMPANY

Divisional Income Statements

For the Year Ended June 30, 2016

1		Cereal Division	Snack Cake Division	Retail Bakeries Division
2	Sales
3	Cost of goods sold
4	Gross profit
5	Operating expenses
6	Income from operations

2. Using the DuPont formula for rate of return on investment, compute the profit margin, investment turnover, and rate of return on investment for each division. If required, round your final answer to one decimal place.

Division	Profit Margin	Investment Turnover	ROI
Cereal	%		%
Snack Cake	%		%
Retail Bakeries	%		%

3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion?

Snack Cake

Retail Bakery

Cereal

The centralized employee travel department of Camtro Company has expenses of $528,000. The department has serviced a total of 6,000 travel reservations for the period. The Northeast Division has made 2,400 reservations during the period, and the Pacific Division has made 3,600 reservations.

	Northeast Division	Pacific Division
Sales	$1,155,000	$1,204,000
Cost of goods sold	590,800	658,000
Selling expenses	231,000	252,000

Use the data provided to determine the divisional income from operations for the Northeast and Pacific divisions. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Amount DescriptionsCost of goods soldGross profitIncome from operationsIncome from operations before service department chargesOperating expensesSalesSelling expensesService department chargesSupervisory salaries

Use the data provided to determine the divisional income from operations for the Northeast and Pacific divisions. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.

Camtro Company

Divisional Income Statements

For the Year Ended June 30, 2016

1		Northeast Division	Pacific Division
2
3
4
5
6
7
8