Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Electronic Brokerage Division $1,990,000 $2,090,000 968,000 882,200 7,300,000 6,100,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Fee revenue Operating expenses Invested assets Fee revenue Mutual Fund Operating expenses Income from operations Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department cost allocations. Division E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Electronic Fund Division Brokerage Division Investment Banking Division 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Investment Turnover Profit Margin Investment Banking Division $2,020,000 1,429,600 4,100,000 % % Mutual Fund Division Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. %
Divisional Income Statements and Return on Investment Analysis E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows: Electronic Brokerage Division $1,990,000 $2,090,000 968,000 882,200 7,300,000 6,100,000 The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations. Fee revenue Operating expenses Invested assets Fee revenue Mutual Fund Operating expenses Income from operations Division 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department cost allocations. Division E.F. Lynch Company Divisional Income Statements For the Year Ended June 30, 20Y8 Mutual Electronic Fund Division Brokerage Division Investment Banking Division 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place. Investment Turnover Profit Margin Investment Banking Division $2,020,000 1,429,600 4,100,000 % % Mutual Fund Division Electronic Brokerage Division Investment Banking Division 3. When faced with limited funds for expansion, management should consider an expansion of the Division first. %
Chapter9: Responsibility Accounting And Decentralization
Section: Chapter Questions
Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...
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