Faced with headquarters' desire to add a new product line, Stefan Grenier, manager of Bilti Products' East Division, felt that he had to see the numbers before he made a move. His division's ROI has led the company for three years, and he doesn't want any letdown. Bilti Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to divisional managers who have the highest ROI. Operating results for the company's East Division for last year are given below: Sales Variable expenses Contribution margin Fixed expenses Operating income $32,200,000 14,840,000 17,360,000 14,784,000 $ 2,576,000 Divisional operating assets $ 8,050,000 The company had an overall ROI of 18% last year (considering all divisions). The new product line that headquarters wants Grenier's East Division to add would require an investment of $4,600,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales Variable expenses Fixed expenses Required: $13,800,000 60% of sales $ 4,554,000 1. Compute the East Division's ROI for last year; also compute the ROI as it would appear if the new product line were added. (Do not round intermediate calculations.) Present New Line Total ROI % 2. If you were in Grenier's position, would you accept or reject the new product line? O Accept O Reject 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? O Adding the new line would increase the company's overall ROI. O Adding the new line would decrease the company's overall ROI.