Required: Tiberus Corporation is a decentralized organization that measures their divisional managers based on their ROI performance. The following are the operating results for the company's Western Division for last year: Sales Variable Expenses Contribution Margin Fixed Expenses Operating Income Divisional Operating Assets $ 34,300,000 $ 15,110,000 $ 19,190,000 $ 16,446,000 $ 2,744,000 $ 8,575,000 Tiberus Corporation has an overall ROI of 16% last year (all divisions). The new product line that headquarters wants the Western Division to add would require an investment of $4,900,000. The cost and revenue characteristics of the new product line per year would be as follows: Sales Variable Expenses Fixed Expenses $ 14,700,000 $ 70% of sales 3,528,000 a) Calculate the Western Division's ROI for last year and if the Western Division were to add the new product line. Show all your calculation (4 marks). b) If you were the Divisional Manager of the Western Division, would you accept or reject the new product line? Explain why? (2 marks) c) If the Divisional Manager of the Western Division was measured based on Residual Income instead of ROI and the company's minimum required rate of return is 15%, would you recommend accepting or rejecting the new line? Show your calculations and explain why you would accept or reject the new line (4 marks). Cover Version 1 1 2 3 4 5 6 MCQ