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Adams Corporation evaluates divisional managers based on Return on Investment (ROn ) and has provided the operating results of the Northem Division from last year.

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Adams Corporation evaluates divisional managers based on Return on Investment (ROn ) and has provided the operating results of the Northem Division from last year. The Controller has asked you to compute the ROI and Residual income based on data from last year and if the division adds a new product line. The Northern Division has an opportunity to add a new product line as follows: Adams Corporaton's minimum acceptable rate of return 15% Required: Compute the following: 1. Northern Division ROI for last year 2. Northern Division ROI if new product line is added 3. Determine whether the Northern Division manager wil ACCEPT or REJECT the new product line based on ROI. 4. Northern Division residual income for last year 5. Northern Division residual income if the new product line is added 6. Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on residual income

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