"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 cornpany for three years, and I don't want any letdown:" Bilings 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 Oristion for this year are given below The company had an overall return on investment (RO) of 1800% this year (considering all divisions). Next year the Ofice Products Division has an opportunity to add a new product line that would require an additional investiment that would increase average 5perating assets by $2.430600. The costand revenue charactentsucs 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. Compute the Office Products Division's margin, turnover, and ROA for the new product iline by itsell. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasts position, wousd you accept or reject the new product Hne? 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 rate of return on operating assets is 15% and that performance is evaluated using residual income a. Compute the Office Products Diviston's residual income for this year b. Compute the Orfice Products Diviston'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 add the new product tine. d. Using the residual income approach, if you were in Dell Havasi's position. would you accept or reject the new product ilne? Complete this question by entering your answers in the tabs below. 1. Compute the Office Products Division'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 itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it perf year and adds the new product line. (Do not round intermediate calculations, Round your answers to 2 decimal places.) "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 cornpany for three years, and I don't want any letdown:" Bilings 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 Oristion for this year are given below The company had an overall return on investment (RO) of 1800% this year (considering all divisions). Next year the Ofice Products Division has an opportunity to add a new product line that would require an additional investiment that would increase average 5perating assets by $2.430600. The costand revenue charactentsucs 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. Compute the Office Products Division's margin, turnover, and ROA for the new product iline by itsell. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasts position, wousd you accept or reject the new product Hne? 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 rate of return on operating assets is 15% and that performance is evaluated using residual income a. Compute the Office Products Diviston's residual income for this year b. Compute the Orfice Products Diviston'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 add the new product tine. d. Using the residual income approach, if you were in Dell Havasi's position. would you accept or reject the new product ilne? Complete this question by entering your answers in the tabs below. 1. Compute the Office Products Division'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 itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it perf year and adds the new product line. (Do not round intermediate calculations, Round your answers to 2 decimal places.)
