Effect of Proposals on Divisional Performance A condensed income statement for the Motorboat Division of Ride of Your Life Inc. for the year ended December 31, 2042, is as follows: Sales Cost of goods sold $3,360,000 (2,171,000) Gross profit Operating expenses Operating income $ 1,189,000 (685,000) $504,000 Invested assets $2,400,000 Assume that the Motorboat Division received no charges from service departments. The president of Ride of Your Life has indicated that the division's rate of return on a $2,400,000 investment must be increased to at least 25.5% 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 $480,000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $86,400. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Purchase new and more efficient machining equipment and thereby reduce the cost of goods sold by $316,800. Sales would remain unchanged, and the old equipment, which has no remaining book value, would be scrapped at no gain or loss. The new equipment would increase invested assets by an additional $1,200,000 for the year. Proposal 3: Reduce invested assets by discontinuing the bass boat line. This action would eliminate sales of $510,000, cost of goods sold of $340,800, and operating expenses of $150,000. Assets of $1,215,100 would be transferred to other divisions at no gain or loss. Required: Previous Next Check My Work Email Instructor Save and Exit All work saved. Submit Assignment for Grading beristered to other VISIONS ano ano 105 Required: 1. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for the Motorboat Division for the past year. For investment turnover and ROI, Round to one decimal place. Motorboat Division Profit margin % Investment turnover ROI 90 Feedback 2. Prepare condensed estimated income statements and compute the invested assets for each proposal. Ride of Your Life Inc.-Motorboat Division Estimated Income Statements For the Year Ended December 31, 20Y2 Proposal 1 Proposal 2 Proposal 3 Sales XS Cost of goods sold Gross profit $ Xs Operating expenses Operating income X Invested assets Fondack Ilinn the DuPont formula determine the fit marin Investment humar and return on investment Previous Next Check My Work All work saved. Email Instructor Save and Exit Submit Assignment for Grading Operating income 88 Invested assets Feedba 3. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each proposal. Round interim calculations (including previously calculated) and final answer to one decimal place. Profit margin Investment turnover ROI Proposal 1: % Proposal 2: %% 96 % Proposal 3: 4. Select whether each of the three proposals would meet the required 25.5% return on investment. Proposal 1: No Proposal 2: No Proposal 3: Yes 5. If the Motorboat Division were 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 25.5% return on investment? Round intermediate calculations to two decimal places and your final answer to one decimal place. % Feedback Foodtech Previous Next > Check My Work All work saved. Email Instructor Save and Exit Submit Assignment for Grading