Required information Use the following information for the Exercises below. [The
ID: 2603764 • Letter: R
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Required information Use the following information for the Exercises below. [The following information applies to the q A food manufacturer reports the following for two of its divisions for a recent year. Beverage Division $2, 664 2,594 2, 682 350 Cheese Division $4,457 4,401 3, 926 635 (Smillions) Invested assets, beginning Invested assets, ending Sales Operating income Exercise 22-12 Return on investment LO A1, A2 1. Compute return on investment. 2. Compute profit margin. 3. Compute investment turnover for the yearExplanation / Answer
Answer 1. Return on Investment Investment Center Operating Income / Average Invested Assets = Return on Investment Beverage 350 / 2,629 = 13.31% Cheese 635 / 4,429 = 14.34% Beverage Division Cheese Division Invested Assets Beginning 2,664 4,457 Ending 2,594 4,401 Average 2,629 4,429 Answer 2. Profit Margin Investment Center Operating Income / Sales = Return on Investment Beverage 350 / 2,682 = 13.05% Cheese 635 / 3,926 = 16.17% Answer 3. Investment Turnover Investment Center Sales / Average Invested Assets = Return on Investment Beverage 2,682 / 2,629 = 1.02 Cheese 3,926 / 4,429 = 0.89
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