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? 5 value: 3.50 points 1 know headquarters wants us to add that new product line,' said Dell Havasi, manager of Billings Company's Office Products
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5 value: 3.50 points 1 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 (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 the most recent year are given below Sales $ 22.835,000 14.297.200 8.537 800 Contribution margin Fixed expenses 6,190,000 $ 2,347.800 S 4,000,000 Net operating income The company had an overall return on investment(ROI) of 17 00% last year (considering all divisions) The Office Products Division has an opportunity to add a new product line that would require an additional investment in operating assets of $2,755,000. The cost and revenue characteristics of the new product line per year would be $ 9,915,000 65% of sales $ 2,607,450 Variable expenses Step by Step Solution
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