I know headquarters wants us to add on that new product line" said Dell Havasimanager of Billings Company's office products division But want to see the numbers before I make any move. Our division has led the company for three years, and I don't want any letdown Bilings Company is a decentralized organization with five autonomous divisions. The divisions are evaluated on the basis of the retum that they are able to generate on invested assets, with yearend bonuses given to the divisional managers who have the highest ROI figures. Operating results for the company's office products division for the most recent year are as follows Sales expenses Contribution margin Less Fixed expenses operating income Divisional operating assets $ 32,500,000 14,625,000 $ 2,925,000 $ 13,000,000 The company had an overall ROI 170% last year (considering all divisions). The office products division has an opportunity to add a new product line that would require an additional investment in operating assets of $ \$3,250,000 . The cost and revenue characteristics of the new product line per year would be as follows Sales Variable expenses Fixed expenses 55% of sales $ Required : 1. Compute the office products division's ROI for the most recent year also compute the the new product line were added( not round Intermediate calculations. Round "Percentage" answers to 2 decimal places, ., 0.1234 should be considered as

"know headquarters wants us to add on that new product line' said Dell Havasi, manager of Billings Company's office products division "But I want to see the numbers before I make any move our division has led the company for three years, and I don't want any letdown Billings Company is a decentralized organization with five autonomous divisions. The divisions are evaluated on the basis of the return that they are able to generate on invested assets, with year end bonuses given to the divisional managers who have the highest ROI figures Operating results for the company's office products division for the most recent year are as follows Sale Variable en $2,500,000 11.075.000 14,525,000 110.000 $2,925,000 31.1.000.000 The company had an overall ROI of 1703. last year considering all divisions). The office products division has an opportunity to add a new product line that would require an additional Investment in operating assets of $3,250.000 The cost and revenue characteristics of the new product line per year would be as follows: Varlle $6,500,000 55 was $ 2,100,000 Required 1. Compute the office products division's ROI for the most recent year also compute the Ron the new product line were added. (Do not found intermediate calculations. Round "Percentage answers to 2 decimal places, (... 0.1234 should be considered as 1. Compute the office products division's Rol for the most recent year also compute the Roll the new product line were added. (Do not round Intermedinte calculations. Round "Percentage" answers to 2 decimal places, (... 01234 should be considered on Tots RO 2. If you were in Dell Havasi's position would you be inclined to accept or reject the new product line? Accept Reject 3. This part of the question is not part of your Connect assignment 4. Suppose that the company views a return of 16.0% on invested assets as being the minimum that any division should earn and that performance is evaluated by the Rl approach Compute the office products division's Rifor the most recent year also compute the Rl as it would appear if the new product line were added Present New Line Total RI Accept Reject 3. This part of the question is not part of your Connect assignment. 4. Suppose that the company views a return of 16.0% on invested assets as being the minimum that any division should earn and that performance is evaluated by the Ri approach o. Compute the office products division's Rifor the most recent year, also compute the Ri as it would appear if the new product line were added Present New Line Total RI b. Under these circumstances, if you were in Dell Havasi's position would you accept or reject the new product line? Rejed