the vice president of operations of free ride bike company is evaluating the performance of two divisions organized as investment centers. invested assets and condensed income statement data for the past year for each division are as follows: road bike division mountain bike division sales $3,720,000 $3,900,000 cost of goods sold 1,637,000 1,833,000 operating expenses 1,487,800 1,560,000 invested assets 3,100,000 2,600,000 required: question content area 1. prepare condensed divisional income statements for the year ended december 31, 20y7, assuming that there were no support department allocations. free ride bike company divisional income statements for the year ended december 31, 20y7 road bike division mountain bike division sales $fill in the blank 2c8b04f4403c03c 1 $fill in the blank 2c8b04f4403c03c 2 cost of goods sold fill in the blank 2c8b04f4403c03c 3 fill in the blank 2c8b04f4403c03c 4 gross profit $fill in the blank 2c8b04f4403c03c 5 $fill in the blank 2c8b04f4403c03c 6 operating expenses fill in the blank 2c8b04f4403c03c 7 fill in the blank 2c8b04f4403c03c 8 operating income $fill in the blank 2c8b04f4403c03c 9 $fill in the blank 2c8b04f4403c03c 10 question content area 2. using the dupont formula for return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. if required, round your answers to one decimal place. division profit margin investment turnover roi road bike division fill in the blank e744e900003103d 1 % fill in the blank e744e900003103d 2 fill in the blank e744e900003103d 3 % mountain bike division fill in the blank e744e900003103d 4 % fill in the blank e744e900003103d 5 fill in the blank e744e900003103d 6 % 3. if management desires a minimum acceptable rate of return of 18%, determine the residual income for each division. residual income road bike division $fill in the blank e744e900003103d 7 mountain bike division $fill in the blank e744e900003103d 8 4. on the basis of operating income, the division is the more profitable of the two divisions. however, operating income consider the amount of invested assets in each division. on the basis of residual income, the division is the more profitable of the two divisions.
