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35 points eBook Hint Prlnt References \"I know headquarters wants us to add that new product line,\" said Dell Havasi, manager of Billings Company's (3ch Products Division. "But I want to see the numbers before I make anyI 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 ve 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 Ofce Products Division for this year are given below: Sales $10,000,000 Variable expenses 6 , 000 , 0 00 Contribution margin 4 , 000 , 0 00 Fixed expenses 3 , 200 , 0 00 Net operating income $ 300- , 0 00 Divisional average operating assets 5 4 r 000 r 0 00 The company had an overall return on investment (ROI) of 15% 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 $1,000,000. The cost and revenue characteristics of the new product line per year would be: Sales $2,000,000 Variable expenses 60% of sales Fixed expenses $ 640 , 0 00 35 points eBook Hint Print References Check my work The company had an overall return on investment (ROI) of 15% 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 $1,000,000. The cost and revenue characteristics of the new product line per year would be: Sales $2,000,000 Variable expenses 60% of sales Fixed expenses $640, 000 | Required: 'I. 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 Ofce 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? 5. Suppose that the company's minimum required rate of return on operating assets is 12% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Ofce Products Division's residual income for the new product line by itself. c. Compute the Ofce 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. 35 Req 1 to 3 Req 4 Req 5 Req 6A to 6C Req 6D points 1. Compute the Office Products Division's margin, turnover, and ROI for this year. eBook 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 Hint year and adds the new product line. Print (Do not round intermediate calculations. Round your answer to 1 decimal place.) References Show less A 1. ROI for this year % 2. ROI for the new product line by itself 3. ROI for next year 35 points eBook Hint Prlnl References 'I. 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? 5. Suppose that the company's minimum required rate of return on operating assets is 12% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual in come for this year. b. Compute the Ofce Products Division's residual income for the new product line by itself. c. Compute the Ofce 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 thls question by entering your answers In the tabs below. Req ltoii Req4 Reg 5 ReqAtoEC ReqD 35 points eBoo k Hint Print References '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 Ofce 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 Hayasi'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 12% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Ofce Products Division's residual income for the new product line by itself. c. Compute the Ofce 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 Hayasi's position. would you accept or reject the new product line? Complete thls question by entering your answers In the halls below. Req 1to3 Req4 Req6D Why do you suppose headquarters ls anxious for the Ofce Products Division to add the new product line? OAdding the newline would increase the company's overall RO. Ohdding the newline would decrease the company's overall ROI. 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 35 line? points Complete this question by entering your answers in the tabs below. eBook Hint Req 1 to 3 Req 4 Req 5 Req 6A to 6C Req 6D Print 6. Suppose that the company's minimum required rate of return on operating assets is 12% and that performance is References 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 A 1 . Residual income for this year 2. Residual income for the new product line by itself 3. Residual income for next year35 points eBook Hint Prlnt References ncq uu cu. 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 Ofce 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 Hayasi'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? 5. Suppose that the company's minimum required rate of return on operating assets is 12% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Ofce Products Division's residual income for the new product line by itself. c. Compute the Ofce 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 thls question by entering your answers In the tabs below. Reg 1 to 3 Reg 4 Reg 5 Uslng the residual lnoorne approach, If you were In Dell Hsvasl's posltlon, would you aooept: or reject the new product Ilne'r' O Reject