Question

The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $2,280,000 $2,400,000 Cost of goods sold 1,003,000 1,128,000 Operating expenses 866,600 912,000 Invested assets 1,900,000 1,600,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations.

Answer 1

As seen below ( solution below )

Net Income : $410400 $360,000

Step-by-step explanation:

Given data

Road Bike Division Mountain Bike Division Sales $2,280,000 $2,400,000

Cost of goods sold 1,003,000 1,128,000

Operating expenses 866,600 912,000

Invested assets 1,900,000 1,600,000

Condensed divisional income statement for the year ended December 31 2017

Road Bike Mountain Bike

sales $2,280,000 $2,400,000

(sales - cost of goods) $1,277,000 $1,272,000

Operating expenses - $866,600 - $912,000

Net Income $410400 $360,000