Truck Deals Inc. has two divisions: New Trucks and Used Trucks. The following segmented financial information is for the most recent fiscal year

	New Trucks Division	Used Trucks Division
Sales	8,000,000	17,000,000
Costs of goods sold	2,900,000	8,000,000
Allocated Overhead	950,000	2,400,000
Selling and administrative expenses	510,000	600,000

The New Trucks division had average operating assets totaling $18,400,000 for the year, and the Used Trucks division had average operating assets of $23,800,000. Assume the cost of capital rate is 14 percent, and the company's tax rate is 35 percent.

REQUIRED:

A. Prepare a segmented income statement, including the profit margin ratio for each division at the bottom of the segmented income statement.

B. Calculate return on investment (ROI) for each division.

C. Calculate residual income for each division.

D Truck Deals Inc. Segmented Income statements For the Year Ended December 31 New Trucks Used Trucks Division Division Sales Cost of goods sold Gross Margin Allocated overhead Selling and administrative expenses Operating income Income tax Net income Profit margin ratio B New Trucks Used Trucks Division Division Operating income Average operating assets Return on investment New Trucks Used Trucks Division Division Operating income Average operating assets Cost of capital rate Required operting income Residual income D Truck Deals Inc. Segmented Income statements For the Year Ended December 31 New Trucks Used Trucks Division Division Sales Cost of goods sold Gross Margin Allocated overhead Selling and administrative expenses Operating income Income tax Net income Profit margin ratio B New Trucks Used Trucks Division Division Operating income Average operating assets Return on investment New Trucks Used Trucks Division Division Operating income Average operating assets Cost of capital rate Required operting income Residual income