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"I know headquarters wants us to add that new product line sald 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 Rois. Operating results for the company's Office Products Division for this year are given below: Sales Variable expenses Contribution margin Fixed expenses Net operating Income Divisional average operating asseta $ 21,500,000 13,565,000 7.935,000 5.995,000 5 1.940,000 $ 4,301,500 The company had an overall return on investment (ROI) of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,313700. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Fixed expenses 59,255,000 655 of sales $2,552,650 Required: Compute the Office Products Division's margin, turnover, and ROI for this year 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4 you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itselt c.Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. RS Reg AO 6C Reg 60 1. Compute the Omce Products O's margin, bumover, and Mol for this year. 2. Compute the Office Products vision's margin, tumover, and so for the new product line by 3. Compute the Oce Products Os margin, turnover, and ROI for year coming that perform the same as this year and adds the new product line De tot un intermediate ale Round your 1. ROI thye 2. ROI for the new produd neby "I 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 this year are given below. Sales Variable expenses Contribution margin Fixed expenses Net operating income Divisional average operating assets $ 21,500,000 13,565,000 7,935,000 5,995,000 $ 1,940,000 $ 4,301,500 The company had an overall return on investment (ROI) of 1700% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,313,700. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Tixed expenses $9,255,000 651 of sales $2,552,650 Required: 1. Compute the Office Products Division's margin. turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itselt. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. if you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppope that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual Income a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. c Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residust income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Req 1 to 3 Reg 4 Reg 5 Reg 6A LO 6C Req 6D If you were in Dell Havasi's position, would you accept or reject the new product line? Accept Reled "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 this year are given below; Sales Variable expenses Contribution margin Fixed expenses Net operating income Divisional average operating assets $ 21,500,000 13,565,000 7,935,000 5.995,000 $ 1,940,000 $ 4,301,500 The company had an overall return on investment (ROI) of 1700% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,313,700. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Fixed expenses $9,255,000 651 of sales $2,552,650 Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, tumover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havas's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself, c Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Reg I to 3 Reg 4 Reg 5 Reg 6A to 6C Reg 6D Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? Adding the new line would increase the company's overall ROI Adding the new line would decrease the company's overall ROI Net operating income Divisional average operating assets $ 1,940,000 $ 4,301,500 The company had an overall return on investment (ROI) of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,313,700. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Fixed expenses $9,255,000 656 of sales $2,552,650 Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself 3. Compute the Office Products Division's margin turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself c Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residual income approach. If you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Reg 1 to 3 Reg 4 Reg 5 Reg 6A to 6C Req 60 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. c. Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. Show less 1. Residual income for this year 2 Residual income for the new product line by itself 3. Residual income for next year "I know headquarters wants us to add that new product line." said Dell Havasi, manager of Bullings 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 this year are given below. Sales Variable expenses Contribution margin Fixed expenses Net operating income Divisional average operating assets $ 21,500,000 13,565,000 7.935,000 5,995,000 $ 1,940,000 $ 4,301,500 The company had an overall return on investment (RON) of 1700% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,313,700. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Fixed expenses $9,255,000 656 of sales $2,552,650 Required: 1. Compute the Office Products Division's margin, turnover, and Rol for this year. 2 Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havast's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 14% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. - Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. Req 1 to 3 Reg 4 Reg 5 Reg 6A to 6C Reg 60 Using the residual income approach, If you were in Dell Havasi's position, would you accept or reject the new product line? Reject
