Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Checy 2 I know headquarters wants us to add that new product line said Del Havas, manager of Billings Company's Office Products Division But I

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Checy 2 "I know headquarters wants us to add that new product line" said Del Havas, 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 20 Billings Company is a decentralized wholesale with five autonomous divisions. The divisions are evaluated on the basis of ROL with year-end bonuses given to the divisional managers who have the highest ROS Operating results for the company's Office Products Division for this year are given below. $ 21,750,000 contribution margin 8.018 The company had an overall retum on investment (ROI) .00% this year considering avion) 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 $2.126,350. The cost and revenue characteristics of the new product line per year would be Variable $35,000 55% of sales 5,56, Required: 1. Compute the Office Products Division's Rol for this year 2. Compute the ice Products Division's ROI for the new product line by itselt 3. Compute the Office Products Division's ROI for next year assuming that it performs the same as this year and adds the new product Checy 2. 20 LUCU FIUL VISAS RECREARLIE wym 3. Compute the Office Products Division's Rol for next year assuming that 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 Del Havasi's position would you accept or reject the new product ine? 00:50 eBook Complete this question by entering your answers in the tabs below. Feg1 to 3 Reg 4 Reas Reg 6A to 60 The 60 1. Compute the Office Products Division's ROI for this year 2. Compute the Office Products Division's ROI for the new product line by itse 3. Compute the Office Products Division's ROI for next year assuming that it performs the same as this year and adds the new productie (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less 59 1. ROI 2. ROI for the new product line by itsel 3 ROI or next year Com 2. 20 EURS DIVISIRISIMIUM 3. Compute the Onice Products Division's ROI for next year assuming that it performs the same as this year and adds the new product ino 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 retum on operating assets is and that performance is evaluated using residual income a. Compute the Office Products Division's residual income for this year b. Compute the ice 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 Havas's position, would you accept or reject the new product line! Complete this question by entering your answers in the tabs below. Healto Reg A to so Res 60 6. Suppose that the company's minimum required rate of return on operating assets is 1 and that performance evaluated using residual income Compute the Office Products Division residual income for this year b. Compute the Office Products in real income for the new product line Compute the Office Products Division's residual income for next year assuming that it perform the same as this year and as the new product 1 Rosalino at 2 Reincome for the new product in the Resincome for next year CP 2012 Soort > Divisional average operating assets $ 4,338,800 The company had an overall retum on investment (ROI) of 18.00% 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 $2,126.350. The cost and revenue characteristics of the new product line per year would be: 00:50:04 Sales Variable expenses Fixed expenses $9, 250,000 65% of sales $2,560, 500 Merences Required: 1. Compute the Office Products Division's ROI for this year. 2. Compute the Office Products Division's ROI for the new product line by itself 3. Compute the Office Products Division's 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 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. Checy 2 "I know headquarters wants us to add that new product line" said Del Havas, 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 20 Billings Company is a decentralized wholesale with five autonomous divisions. The divisions are evaluated on the basis of ROL with year-end bonuses given to the divisional managers who have the highest ROS Operating results for the company's Office Products Division for this year are given below. $ 21,750,000 contribution margin 8.018 The company had an overall retum on investment (ROI) .00% this year considering avion) 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 $2.126,350. The cost and revenue characteristics of the new product line per year would be Variable $35,000 55% of sales 5,56, Required: 1. Compute the Office Products Division's Rol for this year 2. Compute the ice Products Division's ROI for the new product line by itselt 3. Compute the Office Products Division's ROI for next year assuming that it performs the same as this year and adds the new product Checy 2. 20 LUCU FIUL VISAS RECREARLIE wym 3. Compute the Office Products Division's Rol for next year assuming that 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 Del Havasi's position would you accept or reject the new product ine? 00:50 eBook Complete this question by entering your answers in the tabs below. Feg1 to 3 Reg 4 Reas Reg 6A to 60 The 60 1. Compute the Office Products Division's ROI for this year 2. Compute the Office Products Division's ROI for the new product line by itse 3. Compute the Office Products Division's ROI for next year assuming that it performs the same as this year and adds the new productie (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less 59 1. ROI 2. ROI for the new product line by itsel 3 ROI or next year Com 2. 20 EURS DIVISIRISIMIUM 3. Compute the Onice Products Division's ROI for next year assuming that it performs the same as this year and adds the new product ino 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 retum on operating assets is and that performance is evaluated using residual income a. Compute the Office Products Division's residual income for this year b. Compute the ice 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 Havas's position, would you accept or reject the new product line! Complete this question by entering your answers in the tabs below. Healto Reg A to so Res 60 6. Suppose that the company's minimum required rate of return on operating assets is 1 and that performance evaluated using residual income Compute the Office Products Division residual income for this year b. Compute the Office Products in real income for the new product line Compute the Office Products Division's residual income for next year assuming that it perform the same as this year and as the new product 1 Rosalino at 2 Reincome for the new product in the Resincome for next year CP 2012 Soort > Divisional average operating assets $ 4,338,800 The company had an overall retum on investment (ROI) of 18.00% 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 $2,126.350. The cost and revenue characteristics of the new product line per year would be: 00:50:04 Sales Variable expenses Fixed expenses $9, 250,000 65% of sales $2,560, 500 Merences Required: 1. Compute the Office Products Division's ROI for this year. 2. Compute the Office Products Division's ROI for the new product line by itself 3. Compute the Office Products Division's 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 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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamentals Of Auditing

Authors: Basu

1st Edition

8131728854, 978-8131728857

More Books

Students also viewed these Accounting questions