Quinn Company has two divisions, Domestic and International. Invested assets and condensed income statement data...
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Accounting
Quinn Company has two divisions, Domestic and International. Invested assets and condensed income statement data for each division for the year ended December 31, 2009, are as follows:
Domestic Division International Division
Revenues $675,000 $480,000
Operating expenses 450,000 372,400
Service department charges 90,000 50,000
Invested assets 600,000 384,000
Instructions
1. Prepare condensed income statements for the past year for each division.
2. Using the DuPont formula, determine the profit margin, investment turnover, and return
on investment for each division.
3. If managements minimum acceptable return on investment is 10%, determine the residual
income for each division.
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