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

A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the fixed assets available to the center.

. 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	$25,900,000	$8,000,000	$9,950,000
Cost of goods sold	16,610,000	5,590,000	6,725,000
Operating expenses	7,218,000	1,610,000	2,429,000
Invested assets	10,360,000	2,666,667	6,633,333

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

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

The costs of services provided by an internal service department and transferred to a responsibility center.

.

Question not attempted.

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

An expanded expression of return on investment determined by multiplying the profit margin by the investment turnover.

for rate of return on investment

A measure of managerial efficiency in the use of investments in assets, computed as income from operations divided by invested assets.

, compute the profit margin

A component of the rate of return on investment, computed as the ratio of income from operations to sales.

, investment turnover

A component of the rate of return on investment, computed as the ratio of sales to invested assets.

, 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	%		%