"I know headquarters wants us to, add thot new product line," said Dell Havast manager of Ballings Compony's Oithcereroducis Divisis. -But I want to see the numbers before I make any move Oor division's return on investment (ROI) has led the company lor three years: and I don't want any fetdownt. Billings Company is a decentralized wholesaler with five autonompus divisions. The divisions are evaluated on the basis of ROl, with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the companys Olfice Products Division for this year are given below The company had an wverall return on investment. (ROI) of 1800% this year (considening all divisions) Next year the Oifice Products Division has an opportunity to add a new product line that would require on additionat investment that would increase avetage operating assets by $2,430,600. The cost and revenue charecteristics of the now product line per year would be Required: 1 Compute the Orfice Products Division's margin, tumovec, and ROI for this yeat 2 Compute the Office Products Division's margin, tumover, and ROA for the new product line by itself 3. Compute the Office Products Division's margin, turnoves, and ROl for next year assuming that it performs the same as this year and adds the new product line 4 If you were in Dell Havasis postion, would you accept or reject the new product line? 5. Wiy do you tuppose headquarters is anolous for the Office Products Division to add the new product line? 6. Suppose that the compony's minimum required rate of retuin on operating assets is 15% and that performance is evaluoted using residual income a Compute the Otfice Products Diviston is tesidual income for this year b Compute the Office Products Division's tesidual income for the new product line by itself Required: 1 Compute the Office Products Division's morgin, tumover, and ROl for this yeat: 2. Compute the Office Products Division's margin, tumover, and ROl for the new product line by itself. 3 Compute the Office Products Diviskon's margin, turnovec, and ROM for next year assurning that it performs the same as this year 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 andious for the Olfice Products Division to add the new product line? 6 Suppose that the company's minimum required rate of retum on operating assets is 15% 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 produet line. d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? 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 Produdts Division's margin, tumover, and ROI for next year assuming that it performs the same as this year and adds the new product line. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Complete this question by entering your answers in the tabs below. If you were in Dell Havasi's position, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. 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 perform 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 adds the new product line. Complete this question by entering your answers in the tabs below. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the
