The president of Gihbli Industries Inc. has indicated that the division's return on a $1,050,000 investment must be increased to at least 20% 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 $300,000 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 $31,400. This decrease in expense would be included as 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 $180,000, reduce cost of goods sold by $119,550, and reduce operating expenses by $60,000. Assets of $112,500 would be transferred to other divisions at no gain or loss.

Proposal 3: Purchase new and more efficient machinery and thereby reduce the cost of goods sold by $189,000 after considering the effects of depreciation 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 $918,750 for the year.

gage learning Cengage Learning Calculator Effect of Proposals on Divisional Performance A condensed income statement for the Electronics Division of hill Industries Inc. for the year ended December 31 is as follows: $1,575.000 091.000 Cost of goods sold Gross profa $604.000 550.000 Operating expenses Income from operations $126.000 $1.050.000 Invested assets Assume that the Electronics Division received no charges from service departments The president of Gibbli Industries Inc. has indicated that the division's return on $1,050,000 investment must be increased to at least 20 by the end of the next year of operations to continue the division manager is considering the following three proposals pel Transfer equipment with a book value of $300,000 to other divisione ato gain or loss and lease similar quipment. The annual lease payments would be less than the amount of depreciation expens on the old w oment by $31.400. This decrease inexpense would be included as part of the cost of goods Sales would remain unchanged Proposal 2 Reduce invested asset by discontinuing product line. This action would eliminate sales of $180.000. reduce cost of goods sold by $119.550, and reduce operating expenses by $60.000. Assets of $112.500 would be transferred to other divisions at no gain or los Proposal 3: Purchase new and more efficient machinery and thereby reduce the cost of goods sold by $109,000 after considering the effects of depreciation 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 by 1918.750 for the year Required: 1. Using the DuPont formula for return on invest over and return on investment for the Electronic Division for the past year Check My workmore Chessy Wones remaining gage Learning Cengage Learning Calculator Book Required: 1. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for the Electronics Division for the past year. If required, round your answer to one decimal place. Electronics Division Profit margin Investment turnover ROI ssets for each proposal. 2. Prepare condensed estimated income statements and compute the invested Gibbli Industries Inc.-Electronics Division Estimated Income Statements For the Year Ended December 31 Proposal 1 Proposal 2 Proposal 3 Cost of goods sold Gross proft Operating expenses Income from operation 3. Using the DuPont formula for return on investment, determine the profit margin investment turnover, and return on investment for each proposal. Round investment turnover and percentages to one decimal place. Deck My Work 3 more Chea My Won i nin Cost of gooch sold proft Operating expert DUIDO DODOOD Income from operations Invested at for each proposal. Round investment 1. Using the Dupont formula for return on investment, determine the profit margin investment turnover percentages to one decimal place. Pro Profit margin Invest Proposalt Proposal 2 Proposal 4. Which of the three proposals would meet the required 20% return on Proposal Proposal 2 5. If the actronics 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 20 return on investment Enter your increase in investment tuinen tage of current investment turnover. Round interim calculations including previously calculated and final answer to one decimal place Check My Work more CheckMy Works remaining