Adams Corporation evaluates divisional managers based on Return on Investment (ROI) and has provided the operating results of the Northern 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.

Sales$ 27,000,000Variable expenses16,200,000Contribution margin10,800,000Fixed expenses8,805,000Net operating income$ 1,995,000Divisional operating assets$ 9,500,000

The Northern Division has an opportunity to add a new product line as follows:

Required investment$ 2,500,000Net operating income$ 400,000

Adams Corporation'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 will 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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Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for last year are given below: Sales$27,000,000 Variable expenses16,200,000 Contribution margin10,800,000 Fixed expenses8,805,000 Net operating income$1,995,000 Divisional operating assets$9,500,000 The Northern Division has an opportunity to add a new product line as follows: Required investment$2,500,000 Net operating income$400,000 Adams Corporation's minimum acceptable rate of return15% Required: Compute the following: (Use cells A4 to B17 from the given information to complete this question.) 1. Northern Division ROI for last year 2. Northern Division ROI if new product line is added 3. Write an IF statement to determine whether the Northern Division manager will 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