Cost Management: A Strategic Emphasis 5th Edition by David Stout, Edward Blocher, Gary Cokins

Exercise 22

King Mattresses sells both mattress sets and bed frames. Last quarter total sales were $50,000 for mattress sets and $25,000 for bed frames. ROI was 10 percent for both divisions, while asset turnover was 5 for mattress sets and 2 for bed frames. What was the amount of operating profit for each division?

Step 1 of 3

Operating profit:

Operating profit is the profit from which an organization generates profit from day to day activities. In other terms operating profit is the profit that arises after deducting all operating expenses from the sales revenue. Operating expenses are rent, cost of inventory, insurance, etc.