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Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reig's Steel Division Consolidated monitors its divisions on the basis of

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Consolidated Industries is a diversified manufacturer with business units organized as divisions, including the Reig's Steel Division Consolidated monitors its divisions on the basis of both unit contribution and return on investment (ROI), with investment defined as average operating assets employed. All investments in operating assets are expected to earn a minimum return of 12% before income taxes Reigis's cost of goods sold is considered to be entirely variable; however, its administrative expenses do not depend on volume. Selling expenses are a mixed cost with one-third attributed to sales volume. The 2019 operating statement for Reigis follows. The division's operating assets employed were $332,000,000 at November 30, 2019, unchanged from the year before. REIGIS STEEL DIVISION Operating Statement For the Year Ended November 30, 2019 (200s omitted) Sales revenue $186,000 Less expenses: Cost of goods sold 596,000 Administrative expenses 19,000 Selling expenses 16 200 131,200 Income from operations, before tax $ 54,800 Required: 1. Calculate Relgis Steel Division's unit contribution if it produced and sold 3,000,000 units during the year ended November 30, 2019 (Round your answer to 2 decimal places.) 2. Calculate the following performance measures for 2019 for Relgis. a. Pretax ROI, based on average operating assets employed. (Round your answer to 2 decimal places.) b. Residual income (RI), calculated on the basis of average operating assets employed. (Enter your answer in whole dollars, not in thousands.) 1 Contribution margin 2a Return on investment 26. Residual income per unit % 3. Reigis management is presented the opportunity to invest in a project that would earn an ROI of 13%. Reigis is likely to accept the project because ROI is higher than the required rate of return. reject the project because the ROI would lower the current overall ROI. accept the project because positive ROI means a positive dollar value of return reject the project because it poses too much risk

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