PROBLEM 11-21 Return on Investment (ROI) and Residual Income LO11-1, LO11-2 "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 divi- sions 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 income Divisional average operating assets $10,000,000 6,000,000 4,000,000 3,200,000 $ 800,000 $4,000,000