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Alyeska Services Company, a division of a major oil company, provides various services to the operators of the North Slope oil field in Alaska. Data concerning the most recent year appear below. Required: 1. Compute the margin. (Round your answer to 2 decimal places.) 2. Compute the turnover. (Round your answer to 2 decimal places.) 3. Compute the return on investment (RO). (Round your intermediate calculations and final answer to 2 decimal places.) Juniper Design Limited of Manchester, England, proviches design services to residential developers: Last yeur, the company had net operating income of $500,000 on sales of $1,000,000, The company's average operating assets for the year were $1.200,000 and its mirimum required rate of return was 13%. Required: Compute the company's residual income for the yeat -7 know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (RO) has led the company for three years, and I don't want any letdown," Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with yeat-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company's Office Products Division for this year are given below: The company had an overall return on investment (ROI) of 16.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,501,500. The cost and revenue characteristics of the new product line per year would be: Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself, 3. Compute the Office Products. Division's margin, tumover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this yeat: b. Compute the Office Products Division's residual income for the new product line by itself. c. Compute the Office Products Division's residual income for next vear assuminq that it performs the same as this vear and adds the 3. Why do you suppose neadquarters is anxious tor the Uffice Hroducts Uivision to add the new product ine? 6. Suppose that the company's minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. c. Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Complete this question by entering your answers in the tabs below. If you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? Complete this question by entering your answers in the tabs below. 6. Suppose that the company's minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. c. Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. Complete this question by entering your answers in the tabs below. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? \begin{tabular}{l|} \hline Accept \\ Reject \\ \hline \end{tabular}

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