Question
?I know headquarters wants us to add that new product line,? said Dell Havasi, manager of Billings Company?s Office Products Division. ?But I want to
?I know headquarters wants us to add 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?s return on investment (ROI) has led the company for three years, and I don?t want any letdown.? |
Billings Company is a decentralized wholesaler with five autonomous 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 company?s Office Products Division for the most recent year are given below: |
Sales | $ | 21,810,000 |
Variable expenses | 13,741,200 | |
Contribution margin | 8,068,800 | |
Fixed expenses | 6,040,000 | |
Net operating income | $ | 2,028,800 |
Divisional operating assets | $ | 4,363,000 |
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