\"I know headquarters wants us to add on that new product line," said Dell Havasi, manager of Billings Company's ofce products division. "Butl 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 ofce products division for the most recent year are as follows: Sales $504,000,000 Less: Variable expenses 327,600,000 Contribution margin 176,400,000 Less: Fixed expenses 141,120,000 Net operating income $ 35,280,000 Divisional operating assets $ 84,000,000 The company had an overall ROI of 13.5% last year (considering all divisions). The ofce products division has an opportunity to add a new product line that would require an additional investment in operating assets of $50,400,000. The cost and revenue characteristics ofthe new product line per year would be as follows: Sales $100,800,000 Variable expenses 65% of sales Fixed expenses 5; 28,224,000 Required: 1. Compute the ofce products division's ROI for the most recent year; also compute the ROI if the new product line were added. (Do not round intermediate calculations. Round "Percentage" answers to 2 decimal places, (i.e., 0.1234 should be considered as 12.34%).) Present New Line Total 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 ofthe question is not part of your Connect assignment. 4. Suppose that the company views a return of 13.0% on invested assets as being the minimum that any division should earn and that performance is evaluated by the RI approach. a. Compute the ofce products division's RI for the most recent year; also compute the RI as it would appear if the new product line were added. b. Under these circumstances, if you were in Dell Havasi's position, would you accept or reject the new product line? Accept Reject