Question

Arlington Clothing, Inc. shows the following information for its two divisions for year 1 Sales revenue Cost of sales Allocated corporate overhead Other general and administration Lake Region Coastal Region $4,680,000 $12,920,000 2.616.300 6.460.000 249,880 7 75,200 538,900 3,740,000 The results for year 2 have just been posted. Lake Region $4,088,eee 2,616,3ee 306,000 538,900 Sales revenue Cost of sales Allocated corporate overhead Other general and administration 4 Coastal Region $9,520, eee ,760,000 714,000 3,740, eee Required: a. Compute divisional operating income for the two divisions. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed?

Answer 1

A. Computation of the divisional operating income for two divisions.

B 1. What are the gross margin and operating margin percentages for both divisions.

B 2. How well have these divisions perfomed?

Refer to the below images for more detailed solution.

divisional operating income for compute divisions the two Requirement operating Income (thousands) Lake Coastal Region Region particolars Ansufer. Sales Revenue cost of sales Gross margin $4080.0 2616.3 #12926.0 6460.0 $ 146.7 244.8 $6460. 775.2 $38.9 3740.0 Allocated corporate Overhead other general y admin operating income $680.0 $1944.8 6): margin what are the percentages gross for both margin is operating divisions? Requirement Ratio Formula Lake Region Coastal Region Jool- Gross margin percentage Gross margin Sales 35.88.1. operating margin 16.67% 15.05.1. Operating income Sales

ent 62: How well have these divisions performed 2 Requirement Region. 1. Divisional income is greater in the coastal Region, 2. The gross margin percentage is higher in the coastal 3. The operating margin is greater in Lake Region. 4. corporate overhead appears to be allocated on the basis of revenues (6t. in both divisions).