know headquarters wants us to add that new product line, said Del Havasi manager of Billin s Company's ice Prod es sen "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. 10 points 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 ROls. Operating results for the company's Office Products Division for this year are given below eBook $21,750,000 13 731 600 Sales Variable expenses Contribation margin Pixed expenses Net operating ineome Divisional average operating assets References 8,018,400 6,025,000 93 400 4.330800 The company had an overall return on investment CRO of 1800% this year (considering al d visions Next year the Ofice Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2126,350. The cost and revenue characteristics of the new product line per year would be: 9,350,000 65% of sales Sales Variable expenses Fixed expenses $2,560,500 Requ 1. Compute the Office Products Division's ROl for this year. 2. Compute the Office Products Division's ROI for the new product line by itself 3. Compute the Office Products Division's ROI for next year assuming that it performs the same as this year and adds the new product line. oints 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 rate of return on operating assets is 14% and that performance is evaluated using residual income. eBook Print a. Compute the Office Products Division's residual income for this year Referencesb. 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? Complete this question by entering your answers in the tabs below Req 6D Req 5 Req 6A to 6C Req 1 to 3Req 4 1. Compute the Office Products Division's ROI for this year 2. Compute the Office Products Division's ROI for the new product line by itself 3. Compute the Office Products Division's 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.) Show lessA Check my work 3: 4. It 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 rate of return on operating assets is 14% 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? 10 points Print Complete this question by entering your answers in the tabs below References Req 1 to 3 Req4 If you were in Dell Havasi's position, would you accept or reject the new product line? Accep Req 5 Req 6A to 6C Req 6D Reject Req 1 to 3 Req 5 > d. sing lulppre, f yu wer ih Dell Havasi's position, would you accept or reject the new product line? eBook Print oferences Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? Adding the new line would increase the company's overall ROI Req 5Req 6A to 6C Req 6D Adding the new line would decrease the company's overall ROl. Req 4 Req 6A to 6C Complete this question by entering your answers in the tabs below. References Req 1 to 3 Req 4 Req S Req 6A to 6C Req 6D 6. Suppose that the company's minimum required rate of return on operating assets is 14% 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. Show less 1. Residual income for this year 2. Residual income for the new product line by itself Residual income for next year Req5 Print Complete this question by entering your answers in the tabs below References Req 1 to 3 Req 4 Req 5 Req 6A to 6C Req 60 Using the residual income approach, If you were in Dell Havasi's position, would you accept or reject the new product line? Reject Req 6A to 6C Req 6D