Breton Distributors Limited of Sydney has two divisions: Snow Division and Rain Division. The Snow Division reported the following data for the fiscal year ended December 31, 2019:

Sales	$800,000
Variable expenses	440,000
Contribution	360,000
Fixed expenses	228,000
Operating income	$ 132,000

Operating assets (average)

$750,000

The Snow Division has an opportunity to add a new product line that would require an investment of $425,000. The companys accountant assembled the following cost and revenue characteristics of the new product as follows:

Sales	$520,000
Variable expenses	70% of sales
Fixed expenses	95,000

Breton Distributors Limited had an overall ROI of 12% in 2019.

Required: (Calculations should include one digit after a decimal point)

1. Calculate Snow Divisions ROI for 2019 using the formula stated in terms of margin and turnover. (Your calculation must include margin and turnover).

2. Calculate Snow Divisions ROI for the new product. (Your calculation must include margin and turnover.) A TOTAL COLUMN IS NOT REQUIRED

3. Based on the ROI determined in b, would the manager of the Snow Division accept or reject the proposed new product line? Explain. (Your own words; do not copy from text or the solutions from suggested study problems.)

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4. Would the headquarters of Breton Distributors Limited want the Snow Division to add the new product line? Explain why or why not. (Your own words; do not copy from text or the solutions from suggested study problems.)
5. Assume that the companys minimum required rate of return on operating assets is 13% and that performance is evaluated using residual income.

1. Compute Snow Divisions residual income for 2019.
2. Compute Snow Divisions residual income for the new product line.
3. Under these circumstances, would the manager of Snow Division accept or reject the new product line? Explain why.