The Millard Divisions operating data for the past two years

The Millard Division\'s operating data for the past two years are provided below: Year 1 Year 2 Return on investment 15 % 20 % Net operating income ? $ 700,000 Turnover ? 5 Margin ? ? Sales $ 3,370,000 ? Millard Division\'s margin in Year 2 was 140% of the margin in Year 1. The net operating income for Year 1 was:

Solution

Year 2 margin = .20/5 = 4%.

Year 1 margin = .04/1.4 = 2.86%.

Operating Income = 3,370,000 *.0286

= 96,382