The Maxim Corporation reported the following operating results for its three divisions: South, West, and East.
$\begin{array}{lrrrrr}
&\text { South Division }&\text { West Division}&\text { East Division }\
\text { Sales } & \$ 380,000 & \$ 1,700,000 & \$ 2,000,000 \
\text { After-tax income } & \$ 20,000 & \$50,000& \$ 100,000\
\text { Divisional assets } & \$ 200,000 & \$ 625,00 0& \$ 800,000
\end{array}$

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Which division has the highest profit margin?
A) South.
B) West.
C) East.
D) All three divisions have the same profit margin.

Question

The Maxim Corporation reported the following operating results for its three divisions: South, West, and East.
$\begin{array}{lrrrrr}
&\text { South Division }&\text { West Division}&\text {  East Division }\
\text { Sales } & \$ 380,000 & \$ 1,700,000 & \$ 2,000,000 \
\text { After-tax income } & \$ 20,000 & \$50,000& \$  100,000\
\text { Divisional assets } & \$ 200,000 & \$ 625,00 0& \$  800,000
\end{array}$

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Which division has the highest profit margin?
A) South.
B) West.
C) East.
D) All three divisions have the same profit margin.

Quizplus · Accepted Answer

The profit margin is calculated as (After-tax income / Sales). For South: 20,000/380,000 = 5.26%, West: 50,000/1,700,000 = 2.94%, East: 100,000/2,000,000 = 5%. South has the highest profit margin.

The Maxim Corporation Reported the Following Operating Results for Its