QUESTION 1 Jalur Tekstil Bhd. has four Retail Divisions assessed based on changes in returns on invested assets. One of its retail Divisions operating in Klang is considering a new production line with an investment of RM600,000. The operating assets for the Klang Retail Division are currently RM3,600,000. The income statements for the Klang Retail Division for the year 2017 are as follows: Sales Jalur Tekstil Bhd. - Klang Retail Division Pay slip For the year ending December 31, 2017 RM5,000,000 Subtract: Shopping changes Donation margin Subtract: Fixed expenses Net operating income (2,500,000) (2,500,000) 1,800,000 RM 700,000 After analyzing the new release line, the following data were obtained: Sales RM1,600,000 Expenditures changed (percentage of sales) 60% Fixed expenses RM600,000 Increase in current liabilities RM40,000 Be required: a) Determine the effect on return on investment (ROI) for the Klang Retail Division if new product lines are received by comparing the original ROI and ROI with the addition of new investments. (Round off the answer numbers to three decimal places). b) If surplus income is used in the performance appraisal of managers, will this encourage the Division to accept the new product line (assuming the minimum return rate is 6%)?