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Arlington Clothing, Inc., shows the following information for its two divisions for year 1: Lake Region...

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Accounting

Arlington Clothing, Inc., shows the following information forits two divisions for year 1: Lake Region Coastal Region Salesrevenue $ 4,160,000 $ 13,070,000 Cost of sales 2,691,300 6,535,000Allocated corporate overhead 249,600 784,200 Other general andadministration 553,900 3,755,000 Required: a. Compute divisionaloperating income for the two divisions. Ignore taxes. (Enter youranswers in thousands of dollars rounded to 1 decimal place.) b-1.What are the gross margin and operating margin percentages for bothdivisions? (Enter your answers as a percentage rounded to 2 decimalplaces (i.e., 32.12).) b-2. How well have these divisionsperformed? (You may select more than one answer. Single click thebox with the question mark to produce a check mark for a correctanswer and double click the box with the question mark to empty thebox for a wrong answer.) The gross margin percentage is higher inLake Region. Divisional income is greater in Coastal Region. Thegross margin percentage is higher in Coastal Region. Corporateoverhead appears to be allocated on the basis of revenues. Theoperating margin is greater in Lake Region. Divisional income isgreater in Lake Region.

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Answer:

Lake region Coastal region
a Sales (A)          4160000          13070000
Cost of Sales (B)          2691300            6535000
Gross Margin (C=A-B)          1468700            6535000
Allocated corporate overhead (D)              249600                784200
Other general and admin('E)              553900            3755000
Operating Income (F=C-D-E)              665200            1995800
b-1 Sales (A)          4160000          13070000
Gross Margin (C)          1468700            6535000
Gross Margin Percentage (C/A*100)                  35.31                     50.00
Operating Income (F)              665200            1995800
Operating Income Percentage (F/A*100)                  15.75                     15.27
b-2 Following statements are correct
Divisional income is greater in Coastal region
Gross Margin % is higher in coastal region
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