I know headquarters want us to add mat new product line, seid Del Havasi, manager of Bllings Company's Office Products Division. But I want to see the numbers before make any move. Our division's rolumn on Investment (ROI) has led the company for three years, and I don't want any letdown. Bilings Company is a decentralized wholesale with five autonome divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest Rois. Operating results for the compus Office Products Division for the most recent year are given below: Sales Variable expenses Contribution margin Fived expenses Net operating income Divisione operating assets $ 21,902,000 13,788,600 8.113,400 6,056,000 $ 2.068 400 $ 4,562,500 The company had an overal return on vivestment (ROI) of 18.00%ast year (considering all divisions). The Office Products Division has an opportunity to add a new productie Dat would require an additional investment in operating assets of $2,250,500. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Find expenses $9.450,000 65% of sales $2,570 200 Required: 1. Compute the Offion Products Division's ROI for the most recent year to compute the ROI as it would appear if the new product line is added. (Round the "Margin Turnover" and "Ror answers to 2 decimal places.) Present New Line Total Sales Stopering como Operating assets Margin Tum ROL % times % 6 times tienes % 2. you weco in Dell Havais pas on would you accept or reject the new product line? 2. If you were in De Havusi's position, would you scooter roject to new product line? Accept Reject 3. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? Adding the new line would increase the company's overall ROI Adding the newne would decrease the company's overall ROL 4. Suppose that the company's minimum required rate of return on operating assets is 14.00% and that performance is evaluated using residual income a. Compute the Office Products Division's reaktual income for the most recent year, also compute the residual income as it would appear if the new product line is added. Prosant New Line Tota 56 % Operating assets Minimum required return Meriem net operating income Adual net operating income Mirium net operating income Residual income b. Under these circumstances, if you were in Den Havan's position would you accept or not the new product line? Accept Roject References eBook & Resources Worksheet Learning Objective: 12-01 Computo return on investment (ROD) and show how changes in sales expand ses affoot ROL