hjj

Torres Company is a decentralized company with five autonomous divisions. Operating results for the company's Division A are given below: Sales P24,500,000 14,700,000 Less: Variable costs Contribution margin 9,800,000 Less: Fixed costs 8,000,000 Net operating income P 1,800.000 The company had an overall ROI of 24% last year. Division A used an investment of P6,000,000 at the start of the year. Division A has an opportunity to add a new product line that would require an investment of P4,000,000. The cost and revenue characteristics of the new product line per year would be: Sales P 8,000,000 60% of sales Variable costs Fixed costs P 2,240,000 Required: 1. Compute the Division A's ROI for last year. 2. Compute the Division A's ROI if the new product is added