Problem 10-18 Return on Investment (ROI) and Residual Income [LO10-1, LO10-2] "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 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." 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 for this year are given below: Sales Variable expenses Contribution margin Fixed expenses Net operating Locome Divisional average operating assets $ 22,235,000 13,981,800 8,253,200 6,100,000 $2,153,200 $ 4,625,000 The company had an overall return on investment (ROI) of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $2,400,000. The cost and revenue characteristics of the new product line per year would be ere to search Sales $9,000,000 variable expenses 6% of sales < Prev 8 of 8 Next 2 a 701 PM 64F A ENG 4/28/20