Problem 9-18A Retun on Investment (ROI) and Residual Income [LO9-1, LO9-2] "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 ROl, 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 Sales S 21,500,000 Variable expenses 13,565,000 Contribution margin 7,935,000 Fixed expenses Net operating income Divisional operating assets 5,995.000 $ 1,940,000 $4.301,500 The company had an overall return on investment (ROI) of 17.00% 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 $2.313,700. The cost and revenue characteristics of the new product line per year would be Sales Variable expenses Fixed expenses $ 9 255,000 65% of sales $ 2,552,650