The Crunchy Granola Company is a diversified food company thatspecializes in all natural foods. The company has three operatingdivisions organized as investment centers. Condensed data takenfrom the records of the three divisions for the year ended June 30,20Y7, are as follows:

	Cereal Division	Snack Cake Division	Retail Bakeries Division
Sales	$27,300,000	$8,420,000	$9,750,000
Cost of goods sold	16,660,000	5,570,000	6,735,000
Operating expenses	9,548,000	2,260,600	2,235,000
Invested assets	5,460,000	2,105,000	4,875,000

The management of The Crunchy Granola Company is evaluating eachdivision as a basis for planning a future expansion ofoperations.

	Required:
1.	Prepare condensed divisional income statements for the threedivisions, assuming that there were no service departmentcharges.
2.	Using the DuPont formula for return on investment, compute theprofit margin, investment turnover, and return on investment foreach division. If required, round your final answers to one decimalplace.
3.	If available funds permit the expansion of operations of onlyone division, which of the divisions would you recommend forexpansion, based on parts (1) and (2)?

Divisional Income Statements

Shaded cells have feedback.

1. Prepare condensed divisional income statements for the threedivisions, assuming that there were no service departmentcharges.

The Crunchy Granola Company

Divisional Income Statements

For the Year Ended June 30, 20Y7

1		Cereal Division	Snack Cake Division	Retail Bakeries Division
2	Sales
3	Cost of goods sold
4	Gross profit
5	Operating expenses
6	Income from operations

Final Questions

2. Using the DuPont formula for return on investment, computethe profit margin, investment turnover, and return on investmentfor each division. If required, round your final answers to onedecimal place.

Division	Profit Margin	Investment Turnover	ROI
Cereal	%		%
Snack Cake	%		%
Retail Bakeries	%		%