Case 1: Effect of Proposals on Divisional Performance A condensed income statement for the Flour Division of Rizal Flour Manufacturing (RFM) Company for the year ended January 31, 2021 is as follows: Sales P 60,000,000 Cost of Goods Sold 23,600,000 Gross Profit P 36,400,000 Operating Expenses 27,400.000 Income from Operations 90.000 Invested Assets P50,000,000 Assume that the Flour Division received no charges from the Service Departments. The president of RFM has indicated that the division rate of return on a P50,000,000 investment must be increased to 22% by the end of the next if operations are to continue. The division manager is considering the following three proposals: Proposal 1: Transfer equipment with a book value of P10,000,000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would be less than the amount of the depreciation expense on the old equipment by P180,000. This decrease in expense would be part of the Cost of Goods Sold. Sales would remain unchanged. Proposal 2: Reduce invested assets by discontinuing a product line. This action would eliminate sales of P750,000, cost of goods sold of P260,000 and operating expenses of P214,000. Assets of P150,000 would be transferred to other divisions at no gain or loss. Proposal 3: Purchase a new and more efficient equipment and thereby reduce the cost of goods sold by P300,000. 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 P25,000,000 for the year. Instructions: 1. Determine the profit margin, investment turnover and rate of return of investment for the Flour Division of RFM for the past year. 2. Prepare a condensed estimated income statements and compute the invested assets for each proposal. 3. Determine the rate of return of investment, profit margin, investment turnover for each proposals. 4. If the Flour Division is in an industry where the profit margin could not be increased, how much would the investment turnover have to increase to meet the president's required rate of return on investment? Round to two decimal places