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.

Navigation:

1. Use the Open Excel in New Tab button to launch this question.
2. When finished in Excel, use the Save and Return to Assignment button in the lower right to return to Connect.

Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for last year are given below: isales Variable expenses contribution margin Fixed expenses Net operating income \begin{tabular}{|r|} \hline 527,000,000 \\ 16,200,000 \\ \hline 10,800,000 \\ 8,805,000 \\ \hline 51,995,000 \\ \hline \hline \end{tabular} Divisional operating assets 59,500,000 The Northern Division has an opportunity to add a new product line as follows: \begin{tabular}{|l|r|} \hline Required investment & \\ \hline Net operating income & $2,500,000 \\ \hline & $400,000 \\ \hline Adams Corporation's minimum acceptable rate of return & \\ \hline & \\ \hline Required: & \\ \hline \end{tabular} compute the following: (Use cells A4 to B17 from the given information to complete this question.) 1. Northern Division ROl for last year 2. Northern Division ROI if new product line is added 3. Write an If statement to determine whether the Northern Division Imanager 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 REIECT the new product line based on residual income