La Mesa Stores Has the Following Data for Its Two

question 28

Essay

La Mesa Stores has the following data for its two divisions for the year: $$\begin{array} { | l | r | r | } \hline & \text { Uno } & \text { Dos } \\\hline \text { Revenues } & \$ 6,000,000 & \$ 18,000,000 \\\hline \text { Cost of sales } & 3,769,500 & 9,400,000 \\\hline \text { Allocated comorate overhead } & 400,000 & 1,200,000 \\\hline \text { Other general \& administration } & 772,000 & 5,700,000 \\\hline \text { Return on Investment } & 14 \% & 12 \% \\\hline\end{array}$$
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:

Corporate Policy

Guidelines and rules established by a company to govern its activities and decisions, reflecting its culture and objectives.

Business Judgment Rule

A legal principle that protects corporate directors and officers from liability for decisions made in good faith which they believed to be in the best interest of the company.

Duty of Diligence

The obligation of a person or entity to exercise reasonable care and attention in carrying out tasks and responsibilities.

Corporate Records

Official documents that corporations are legally required to maintain, including information on business activities, financial performance, and legal obligations.