Arco Company has two divisions - Mixers and Food Processors. Arco Company Segmen

Question

Arco Company has two divisions - Mixers and Food Processors. Arco Company Segmented Income Statements For the Current Fiscal Year Ended December 31 Mixer Food Processor Division Division Sales $2,500,000 $1,350,000 Cost of goods sold Gross margin 1,450,000 685,000 Allocated overhead 235,000 185,000 Selling and administrative expenses Operating income Income tax expense (45%) 195,000 1,020,000 410,000 184 500 Net income Using the segmented income statements, what is the profit margin ratio for the Mixer Division (to the nearest hundredth of a percent)? O 42.00% O 22.44% O 40.80% O 58.00%

Explanation / Answer

Profit margin is equal to=Net income/Sales

which is equal to

=(561000/2,250,000)

=22.44%

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