"I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Comparyy'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 outonomous divisions. The divisions are evaluated on the basis of ROl, with year-end bonuses given to the divisional managers who have the highest ROls. Operating results for the company's Office Products Division for this year are given below: The company had an overall return on investment (ROl) of 19.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional imvestment that would increase averoge operating assets by $2,600,000. The cost and revenue characteristics of the new product line per year would be: Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year: 2. Combute the Office Products Division's macain, tumover. and ROI for the new oroduct line bv itseif. Required: 1. Compute the Office Products Divjsion's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itselt, 3. Compute the Olfice Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this yeat and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rote of return on operating assets is 16% and that performance is evaluated using residual income. a. Compute the Office Products Division's residual income for this year. b. Compute the Office Products Division's residual income for the new product line by itself. c. Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line