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Problem 11-18 Return on Investment (ROI) and Residual Income IL011-1, LO 11-2] "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) h led the company for three years, and I don't want any letdown." as 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 Rois. Operating results for the company's Office Products Division forthe most recent year are given below: Sales 21,100,000 Variable expenses 13,350,400 7,749,600 Contribution margin 5,935,000 Fixed expenses Net operating income 1,814,600 4,220,000 Divisional operating assets The company had an overall return on investment (RO) of 18.00% last year (considering all divisions). The Office Products Division has an opportunity to add a new product line that would require an additional investment in operating assets of $2,262,500. The cost and revenue characteristics of the new product line per year would be: Sales 9,050,000 Variable expenses 65% of sales Fixed expenses 2,534,000 Required 1. Compute the Office Products Division's ROl for the most recent year; also compute the ROI as it would appear if the new product line is added. (Round the "Margin", "Turnover" and "ROI" answers to 2 decimal places.)