Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I know headquarters wants us to add that new product line. said Brian Stettler, manager of Sparks Products' Central Division. But I want to see

image text in transcribed
image text in transcribed
I know headquarters wants us to add that new product line. said Brian Stettler, manager of Sparks Products' Central Division. "But I want to see the numbers before make a move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown. Sparks Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of Roi, with year-end bonuses given to divisional managers who have the highest ROI. Operating results for the company's Cen Division for last year are given below Sales Variable expenses 23,700,000 15.081,818 Contribution margin Fixed expenses 8,618,182 6,514,000 Net operating income $2,104,182 Divisional operating assets $5.925.000 The company had an overall ROI of 17% last year (considering all divisions). The company's Central Division has an opportunity to add a new product line that would require an investment of $3,770,000. The cost and revenue characteristics of the new product line per year would be as follows Sales Variable expenses Fixed expenses $11.140,000 65% of sales 3,040,910

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Concept And Objectives Of Quality Auditing ISO 9001Total Quality Management

Authors: Mahmoud Fadhel Idan

1st Edition

6202795158, 978-6202795159

More Books

Students also viewed these Accounting questions

Question

sharing of non-material benefits such as time and affection;

Answered: 1 week ago