Problem 6 (10 Marks) - PERFORMANCE MEASUREMENT In order to try to improve the efficiency of the distribution activities at Zecon, Mr. McDowall was considering implementing a new order processing system. A software company that specialised in order processing and distribution software had recently approached him. The new system looked very appealing, but seemed quite expensive: a start-up investment of $1.5 million dollars for new computer equipment. Mr. McDowall had therefore been considering the ramifications of this new system, and estimated the following: - Inventories will be reduced $3 million - Transportation consolidations would reduce transportation costs by $850,000 per year - Warehousing costs of $200,000 per year will be eliminated - The new order processing system will incur annual operating costs of $300,000 - The new system will provide management with 4 additional days for planning production operations, thereby reducing costs of goods sold by 3% of current costs. a. Calculate the change in Return on Assets for the company (Marks: 5). Show your workings b. Make a recommendation (with justification) to Mr. McDowall as to whether he should implement the new system, or not. In making the recommendation, focus on areas of improved efficiency. (Marks: 5)