The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows:
Line Item Description Business Division Consumer Division
Sales $ $
Cost of goods sold
Operating expenses
Invested assets
Required:
Question Content Area
Prepare condensed divisional income statements for the year ended December Y assuming that there were no support department allocations.
Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. Round percentages to one decimal place and the investment turnover to two decimal places.
If management desires a minimum acceptable return on investment of determine the residual income for each division.
