Managerial accounting

"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 l make any move. Our division's return on investment (ROI) has led the company for three years, and Idon't want any 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 the most recent year are given below: 22,100,000 Sales 13,893,400 Variable expenses Contribution margin 8,206,600 6,085,000 Fixed expenses 2,121,600 Net operating income 5,200,000 Divisional operating assets The company had an overall return on investment (ROI) of 16.00% last year (considering all divisions). The Office Products Division has an opportunity to add a new product line that would require an additional assets of S2,387,500. The cost and revenue characteristios of the new product line per year would be: 9,550,000 Sales 65% of sales Variable expenses $2,578,500 Fixed expenses