Low Carb Diet Supplement Inc has two divisions Division A ha

Low Carb Diet Supplement, Inc., has two divisions. Division A has a profit of $184,000 on sales of $2,110,000. Division B is able to make only $30,500 on sales of $363,000.

a. Compute the profit margins (return on sales) for each division. (Input your answers as a percent rounded to 2 decimal places.)

Division A

Division B

b. Based on the profit margins (returns on sales), which division is superior?

Division B

Division A

Solution

profit margin of Division A = 184,000/5,110,000 = 8.72%

profit margin of Dividion B = 30,500/363,000 = 8.40%

Division A is superior