H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through company-owned and franchised operations. The total number of U.S. offices that are company-owned and franchised for a recent year is as follows:

________________________________Company-Owned        Franchised           Total

H&R Block Offices (U.S.).....................6,365........................3,921................10,286

Recent financial information provided by H&R Block for its company-owned and franchised operations is as follows (in millions):

____________________________Company-Owned             Franchised

Revenues.......................................$2,651

Franchise fees.......................................................................$335

Cost of services.................................1,630

Property, plant, and equipment...............2,979

In addition, H&R Block had $653 million in selling, general, and administrative expenses. These expenses support both company-owned and franchised operations. For example, H&R Block advertising supports both segments. H&R Block had an additional $1,537 million in unallocated property, plant, and equipment. These fixed assets are not associated with its tax service offices, but represent other assets, such as those used at its general headquarters.

A. Allocate the selling, general, and administrative expenses to the company-owned and franchised operations based on the relative number of offices in each segment. (Round to the nearest million.)

B. Allocate the unallocated property, plant, and equipment to the company-owned and franchised operations based on the relative number of offices in each segment. (Round to the nearest million.)

C. Determine the income from operations for each segment, including the allocated selling, general, and administrative expenses from (A).

D. Determine the profit margin for each segment. (Round percentages to one decimal place.)

E. Determine the investment turnover for each segment, including the allocated property, plant, and equipment from (B). (Round to two decimal places.)

F. Use the DuPont formula to determine the return on investment for each segment. (Round percentages to one decimal place.)

G. What financial variables would impact an H&R Block franchisee's ROI as compared to variables impacting a non-franchised independent tax preparation business?