Calculator Effect of Pr on Divisional Performance densed income statement for the Electronics Division of Gihbli Industries Inc. for the year ended December 31 is as follows: $4,160,000 Cost of goods sold 2,687,000 Gross profit Operating expenses Income from operations Invested assets 1,473,000 849,000 624,000 $3,200,000 Assume that the Electronics Division received no charges from service departments. The president of Gihb Industries Inc. has indicated that the division's return on a $3,200,000 investment must be increased to at least 24% by the end of the next year if operations are to continue. The division manager is considering the following three proposals Proposal 1: Transfer equipment with a book value of $640,000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would be less than the amount of depreciation expense on the old equipment by $115,200. This decrease in expense would be indluded as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Reduce invested assets by discontinu and reduce operating expenses by $200,000. Assets of $1,620,200 would be transferred to other divisions at no gain or loss. ing a product line. This action would eliminate sales of $680,000, reduce cost of goods sold by $454,400 expense on the new equipment. Sales would remain unchanged, and the old machinery, which has no remaining book value, would be scrapped at no gain or loss. The new machinery would increase invested assets by $1,600,000 for the year Proposal 3: Purchase new and more efficient machinery and thereby reduce the cost of goods sold by $422,400 after considering the effects of deprecation Previous