Problem 11-21 (Algo) Return on Investment (ROI) and Residual Income [LO11-1, LO11-2] "I know hesdquarters wants us to add that new product line," sald Del Havasl, mansger of B lings Company's Office Producta Divlaion. "But l want to ses the numbers before I make sny move. Our clvisian's retum on lnvestment (ROb) has led the company for three years, and I don't want any letdown." Bilings Compony is s decentralized wholessler with five sutonomous divisions. The divlalons sre evolusted on the bss's of ROl, with yearend bonuses given to the divlaionsl managers who hove the highest ROla. Operating results for the company's Office Products Divilion for thls year are given below: The compony had an oversll return on investment (ROl) of 1B.00 \% thls year (considering al divalons). Next year the Office Products Divialon has an opportunity to add a new product line that would require an additionsl investment that would increase sverage opersting asseta by $2,126,350. The cost snd revenue characterlatics of the new product line per year would be: Required: L. Compute the Office Products DMsion's margin, turnover, snd ROl for thls year 2 Compute the Office Products DMlsion's margin, turnover, snd ROl for the new product line by Itsef. 3. Compute the Office Products DWision's margin, turnover, snd ROl for next year ssaum'ng that it performs the same sa th's year and adds the new product line. A. If you were in Dell Hoveal's poaltion, would you occept or reject the new product line? 5. Why do you suppose headquarters ls snodous for the Office Products Division to add the new product line? 6. Suppoce that the company's minimum requlred rate of return on operating sasets la lus snd thst performance is evalusted using realdual income. a. Compute the Office Products Dision's residusl income for thls year. b. Compute the Office Products DMsion's residusl income for the new product line by liself. c. Compute the Office Products DMlsion's residusl income for next yesr sauming that it performs the same as this year and adds the new product line. d. Using the residusl income approsch, if you were in Dell Hovasis poaltion, would you accept or reject the new product line? Complete this question by entering your answers in the tabs below. 1. Compute the Cffice Products Division's margin, turnower, and Fol for this year: 2. Compute the Office Products Divisian's margin, turnower, and Fol for the new product line by itself. 3. Compute the Offlice Products Devisian's margin, turnower, and FoI for nest vear assuming that it performa the same as this year and adds the new product line. Note: Do not round intermediste calculatians. Found your answers to 2 decimel places