I know headquarters wants us to add that new product line, said Dell Havasi, manager of Billings Companys Office Products Division. But I want to see the numbers before I make any move. Our divisions return on investment (ROI) has led the company for three years, and I dont 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 companys Office Products Division for this year are given below:

Sales Variable expenses Contribution margin Fixed expenses Net operating income Divisional average operating assets $ 21,600,000 13,622,600 7,977,400 6,010,000 1,967,400 ,9671400 $ 4,499,200