Nue Wines Has the Following Data for Its Three Divisions

question 70

Essay

Nue Wines has the following data for its three divisions for the year:
$\begin{array}{lr}&\text {Ein }&\text {Zwei}&\text {Drei}\\\text { Revenues } & \$ 12,000,000&\$38,000,000&\$28,000,000 \\\text { Cost of sales } & 7,695,000&19,000,000&14,000,000 \\\text { Allocated corporate } & \\\text { overhead } & 720,000&2,280,000&2,100,000 \\\text { Other general \& } &\\\text { administration } & 1,585,000 & 11,000,000 & 11,000,000 \\\text { Return on } & & &\\\text {Investment }&15\%&12\%&9\%\end{array}$
Required:
a. Compute divisional operating income for each of the divisions. Assume taxes are 35%.
b. Calculate the profit margin ratio for each division.
c. Calculate the asset turnover for each division.

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Definitions:

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are close substitutes, leading to price competition and efficiency.

Output

The quantity of goods or services produced by a company, industry, or country within a specific period.

Economic Inefficiency

A situation in which resources are not used in the most effective way, leading to potential losses in productivity or value.

Consumer Preferences

The specific desires, likes, and dislikes that influence the purchasing behavior of consumers.