Problem #$11$: Planning & Controlling

Tesla$-$R$-$Us Inc. has two separate divisions: Electric cars and Gasoline Cars. The following segmented financial

information is for Tesla$-$R$-$Us's most recent fiscal year:

The Electric division had average operating assets totaling $$15,660,000$ for the year, and the Gasoline division

had average operating assets of $$20,520,000.$ Assume the cost of capital rate is $14\%,$ and the company's tax

rate is $20\%.$

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

the segmented income statement. Be sure it is in the proper format of a segmented I$/$S$.$

Calculate the return on investment $($ROI$)$ for each division

Calculate the residual income for each division.

Summarize the answers to parts $1,2,$ and $3.$ What does this information indicate about each division?