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?I know headquarters wants us to add that new product line,? said Brian Stettler, manager of Sparks Products? Central Division. ?But I want to see the numbers before I make a move. Our division?s return on investment (ROI) has led the company for three years, and I don?t want any letdown.?

Sparks 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 Central Division for last year are given below:

Sales	$	22,100,000
Variable expenses		14,063,636
Contribution margin		8,036,364
Fixed expenses		6,194,000
Net operating income	$	1,842,364
Divisional operating assets	$	5,525,000

The company had an overall ROI of 13% last year (considering all divisions). The company?s Central Division has an opportunity to add a new product line that would require an investment of $3,450,000. The cost and revenue characteristics of the new product line per year would be as follows:

Sales	$ 10,340,000
Variable expenses	65% of sales
Fixed expenses	$ 2,880,910