divisional performance analysis and evaluation

Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement cata for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $5,160,000 $5,490,000 Cost of goods sold 2,270,000 2,580,000 Operating expenses 2,064,400 1,812,000 Invested assets 4,300,000 6,100,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 2017, assuming that t were no service department charges Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 2017 Road Bike Division Mountain Bike Division Sales Cost of goods sold Gross profit Operating expenses Income from operations 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. If required, round your answers to one decimal place. Division Profit Margin Investment Turnover ROI Road Bike Division Mountain Bike Division 3. If management desires a minimum acceptable rate of return of 15%, determine the residual income for each division. If required, use the minus sign to indicate a negative income. Residual Income Road Bike Division Mountain Bike Division consider the amount of invested 4. On the basis of income from operations, the U Division is the more profitable of the two divisions. However, income from operations Division is the mare profitable of the two divisions. assets in each division. On the basis of residual income, the