Question 2 [Marks: 2+8=10] a) Write down the advantages and disadvantages of decentralization with examples b) ABC is a decentralized company with four autonomous divisions. The divisions are evaluated on a basis of the return that they are able to generate on invested assets, with year end bonuses given to divisional managers who have the highest ROI figures. Operating results for the company's East Division for last year are given below: Sales 31,000,000 Less: Variable expenses 23,400,000 Contribution Margin 7,600,000 Less: Fixed Expenses 6,920,000 Net Operating Income 680,000 Divisional Operating assets 5,250,000 The company had an overall return on investment (ROI) of 16 % last year. The company's East Division has an opportunity to add a new product line that would require an investment of th. 3,000,000. The cost & revenue characteristics of the new product line per year would be as follows: Sales 8.000,000 Variable expenses 70% of sales Fixed Expenses 1,520,000 Required: i. Compute the ROI for East Division & new product line; also compute the ROI as if the new product line is added. ii. Would you be inclined to accept or reject the new product line? Explain. iii. Compute the East Division's residual income for last year and new product line; also compute the residual income as it will appear if the new product line is added. iv. Would you be inclined to accept or reject the new product line? Explain