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1. Retail Bakeries Division The Crunchy Granola Company Divisional Income Statements For the Year Ended June 30, 20Y7 Snack Cereal Cake Division Division Sales Cost
1. Retail Bakeries Division The Crunchy Granola Company Divisional Income Statements For the Year Ended June 30, 20Y7 Snack Cereal Cake Division Division Sales Cost of goods sold Gross profit Operating expenses Income from operations dy Return on Investment (ROI = Profit Margin x Investment Turnover Return on Investment (ROI) Income from Operations Sales Sales Invested Assets Cereal Division: ROI 11 I! Snack Cake Division: ROI 11 = Retail Bakeries Division: ROI X HE Obj. 4 2. Cereal Division ROI 10.09 DEL TEMPLATE PR 9-3A Divisional income statements and retum on investment analysis 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, 2017 are follows: Cereal Snack Cake Retail Division Division Bakeries Division Sales $25,000,000 $8,000,000 59,750,000 Cost of goods sold 16,670,000 5,525,000 6,799,000 Operating expenses 7,330,000 1,945,000 2272 500 Invested assets 10,000,000 4,000,000 6.500,000 The management of The Crunchy Granola Company is evaluating each division as a basis for planning a future expansion of operations Instructions 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges 2. Using the DuPont formula for retum on investment, compute the profit margin, investment turnover, and retum on investment for each division (Round percentages and the investment rumover to one decimal place.) If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion based on parts 1 and 2 Explain
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