The vice president of operations of Moab Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year ending October 31, 20Y9, for each division are as follows:

Instructions
1. Prepare condensed divisional income statements for the year ended October 31, 20Y9, assuming that there were no service department charges.
2. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each division.
3. If management desires a minimum acceptable rate of return of 10%, determine the residual income for each division.
4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3).

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Touring Bike Division Trail Bike Division Sales Cost of goods sold Operating expenses Invested assets $1,500,000 900,000 495,000 750,000 $5400,000 4,000,000 968,000 3,600,000