The segmented income statements presented as follows are for the two divisions of Chang and Associates.

Assume the East division had average operating assets totaling $$2,250,000$ for the year, and the West division had

average operating assets of $$400,000$ for the year. Calculate return on investment for each division.

Chang and Associates

Segmented Income Statements

for the Fiscal Year Ended December $31$

$($dollar amounts are in thousands$)$

East Division West Division

Sales $$1,500,000$$$500,000$

Cost of goods sold $800,000215,000$

Gross margin $$700,000$$$285,000$

Allocated$$l overhead $150,000115,000$

Selling and administrative expenses $100,00075,000$

Operating income $$450,000$$$95,000$

Income tax expense $(30\%$ rate$)135,00028,500$

Net income $ $315,000$$$66,500$