Profit Margin, Investment Turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales Cost of goods sold Gross profit Administrative expenses Income from operations The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,950,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin $1,170,000 526,500 $643,500 409,500 $234,000 Investment turnover Rate of return on investment % Investment turnover Rate of return on investment b. If expenses could be reduced by $58,500 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? Round the investment turnover to one decimal place. Profit margin % % %

Profit Margin, Investment Turnover, and return on investment The condensed income statement for the Consumer Products Division of Fargo Industries Inc. is as follows (assuming no service department charges): Sales Cost of goods sold Gross profit Administrative expenses Income from operations The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that $1,950,000 of assets have been invested in the Consumer Products Division. Round the investment turnover to one decimal place. Profit margin $1,170,000 526,500 $643,500 409,500 $234,000 Investment turnover Rate of return on investment % Investment turnover Rate of return on investment b. If expenses could be reduced by $58,500 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division? Round the investment turnover to one decimal place. Profit margin % % %

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 17E: Evaluating selling and administrative cost allocations Gordon Gecco Furniture Company has two major...

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