Chapter 9: Evaluating Decentralized Operations Chapter Contents 2 ADM 3 H&R Block: Franchise segment return on investment H&R Block Inc. provides tax preparation services throughout the United States and other parts of the world. These services are provided through company-owned and franchised operations. The total number of U.S. offices that are company-owned and franchised for a recent year is as follows REAL WORLD A-Z Company-Owned Franchised Total H&R Block Offices (U.S.) Recent financial information provided by H&R Block for its company- owned and franchised operations is as follows (in millions): 6,365 3,921 10,286 Company Owned Franchised Revenues Franchise fees $2,651 $335 1,630 2,979 Cost of services Property, plant, and equipment In addition, H&R Block had $653 million in selling, general, and administrative expenses. These expenses support both company-owned and franchised operations. For example, H&R Block advertising supports both segments. H&R Block had an additional $1,537 million in unallocated property, plant, and equipment. These fixed assets are not associated with its tax service offices, but represent other assets, such as those used at its general headquarters. nents H&R Block hackan addithona unallocated property, plant, and equipment. These fixed assets are not associated with its tax service offices, but represent other assets, such as those used at its general headquarters. A. Allocate the selling, general, and administrative expenses to the company-owned and franchised operations based on the relative number of offices in each segment. (Round to the nearest million.) A-Z B. Allocate the unallocated property, plant, and equipment to the company-owned and franchised operations based on the relative number of offices in each segment. (Round to the nearest million.) C. Determine the income from operations for each segment, including the allocated selling, general, and administrative expenses from (A) D. Determine the profit margin for each segment. (Round percentages to one decimal place.) E. Determine the investment turnover for each segment, including the allocated property, plant, and equipment from (B). (Round to two decimal places.) F. Use the DuPont formula to determine the return on investment for each segment. (Round percentages to one decimal place.) G. What financial variables would impact an H&R Block franchisee's ROI as compared to variables impacting a non-franchised independent tax preparation business