A condensed income statement for the Electronics Division of Gihbli Industries Inc. for the year ended December 31 is as follows:Sales$2,760,000Cost of goods sold1,847,600Gross profit$ 912,400Operating expenses526,000Income from operations$ 386,400Invested assets$2,300,000Assume that the Electronics Division received no charges from service departments.The president of Gihbli Industries Inc. has indicated that the division's return on a $2,300,000 investment must be increased to at least 19.6% by the end of the next year if operations are to continue. The divisionmanager is considering the following three proposals:Proposal 1: Transfer equipment with a book value of $460,000 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 onthe old equipment by $82,800. 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 $488,800, reduce cost of goods sold by $326,600, and reduce operating expenses by $143,800. Assets of$1,164,500 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 $303,600 after considering the effects of depreciation expense on the new equipment. Sales would remainunchanged, 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 $1,150,000 for the year.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. Round your answers to one decimal Chapter 24 GradedеBookInvested assets2,400,0002,000,0001,300,000The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.Required:1. Prepare condensed divisional income statements for the three divisions, assuming that there were no service department charges.E.F. Lynch CompanyDivisional Income StatementsFor the Year Ended June 30, 20Y8Mutual Fund Division Electronic Brokerage Division Investment Banking DivisionFee revenue660,000 V680,000640,000Operating expenses324,000 v284,000452,800336,000 V396,000 vIncome from operations187,200FeedbackV Check My Work1. For each division, subtract operating expenses from fee revenue.2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round your answers to one decimal place.DivisionProfit MarginInvestment TurnoverROIMutual Fund Division50.9 v %27.5 x14 x %Electronic Brokerage Division58.2 v %34 x19.8 x %Investment Banking Division29.3 V %49.2 X14.4| Х %

Name: A condensed income statement for the Electronics Division of Gihbli I
Uploaded: 2022-11-04T13:36:07.000Z
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Description: A condensed income statement for the Electronics Division of Gihbli Industries Inc. for the year ended December 31 is as follows:Sales$2,760,000Cost of goods sold1,847,600Gross profit$ 912,400Operating expenses526,000Income from operations$ 386,400I

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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. Round your answers to one decimal

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. Round your answers to one decimal

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...

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