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"I know headquarters wants us to add that new product e," 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 (ROI) 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 year-end bonuses given to the divisional managers who have the highest ROls. Operating results for the company's Office Products Division for this year are given below: $23,000,000 14,365,000 8,635,000 6,220,000 Sales Variable expenses Contribution margin Fixed expenses Net operating income Divisional average operating assets 2.415,000 $5,001,000 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 $2,501,000. The cost and revenue characteristics of the new product line per year would be: $10,100,000 65% of sales Sales Variable expenses Pixed expenses $2,644,900 Req 6D Req 6A to 6C Req 5 Req 1 to 3Req 4 1. Compute the Office Products Division's ROI for this year. 2. Compute the Office Products Division's ROI for the new product line by itself. 3. Compute the Office Products Division's 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.) Show lessA 1. ROI for this year 2. ROl for the new product line by itself 3. ROI for next year Req4 Req 1 to 3Req 4 If you were in Dell Havasi's position, would you accept or reject the new product line? OAccept OReject Req 5Req 6A to 6C Req 6D Req 1 to 3 Req 5 > Complete this question by entering your answers in the tabs below. Req 1 to 3 Why do you suppose headquarters is anxi OAdding the new line would increase the companys overall ROl. Req Req 6A to 6C Req 6D Req 4 ous for the Office Products Division to add the new product line? OAdding the new line would decrease the company's overall ROl Req 4 Req 1 to 3 Req 4 Req 5 Req 6A to 6CReq 6D 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 a adds the new product line. Show lessA 1. Residual income for this year 2. Residual income for the new product line by itself 3. Residual income for next year Req 5 Req 6D> Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 ing the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Usi OAccept OReject K Req 6A to Bc

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