Huntswell Corporation has two major divisions-Agricultural Products and Industrial Products. Data for the year just finished is as follows:
$\begin{array}{|l|r|r|}
\hline& \text { Agriculture Division } & \text { Industrial Division } \
\hline \text { Sales revenue } & \$ 140,000 & \$ 1,040,000 \
\hline \text { Operating income } & \$ 16,400 & \$ 220,000 \
\hline \text { Average assets } & \$ 300,000 & \$ 5,540,000 \
\hline \text { Target rate of return } & 4.0 \% & 4.0 \% \
\hline
\end{array}$
-
For the Industrial Division, how much is the profit margin?
A) 21.2%
B) 19.3%
C) 17.4%
D) 16.7%

Question

Huntswell Corporation has two major divisions-Agricultural Products and Industrial Products. Data for the year just finished is as follows:
$\begin{array}{|l|r|r|} 
\hline& \text { Agriculture Division } & \text { Industrial Division } \
\hline \text { Sales revenue } & \$ 140,000 & \$ 1,040,000 \
\hline \text { Operating income } & \$ 16,400 & \$ 220,000 \
\hline \text { Average assets } & \$ 300,000 & \$ 5,540,000 \
\hline \text { Target rate of return } & 4.0 \% & 4.0 \% \
\hline
\end{array}$
-
For the Industrial Division, how much is the profit margin?
A) 21.2%
B) 19.3%
C) 17.4%
D) 16.7%

Quizplus · Accepted Answer

The profit margin is calculated as (Operating Income / Sales Revenue) * 100. For the Industrial Division, it is ($220,000 / $1,040,000) * 100 = 21.2%.

Huntswell Corporation Has Two Major Divisions-Agricultural Products and Industrial Products