1. Fallow Corporation has two separate profit centers. The following information

ID: 2534048 • Letter: 1

Question

1. Fallow Corporation has two separate profit centers. The following information is available for the most recent year: West Division East Division Sales (net) $380,000 $530,000 Salary expense 44,000 58,000 Cost of goods sold 134,000 247,000 The West Division occupies 9,500 square feet in the plant. The East Division occupies 5,700 square feet. Rent, which was $ 76,000 for the year, is an indirect expense and is allocated based on square footage. Compute operating income for the West Division. $196,500. $149,000. $148,000. $154,500. $139,500.

2.Holo Company reported the following financial numbers for one of its divisions for the year; average total assets of $6,050,000; sales of $6,125,000; cost of goods sold of $3,475,000; and operating expenses of $1,247,000. Compute the division's return on investment: rev: 04_03_2018_QC_CS-123530 22.91%. 20.4% 23.2%. 16.3%. 20.6%.

Explanation / Answer

Note: Both questions are separate & independent. So as per rule I am answering first question only.

Question – 1;

Operating income for the West Division = $154500

Explanation;

Sales

$380000

Less: Cost of goods sold

($134000)

Gross margin

$246000

Less:

Salary expense

($44000)

Rent ($76000 * 9500 / 15200)

($47500)

Operating income for west division

$154500