ROI, Residual Income Garcia Industries produces tool and de machinery for manufacturers. The company expanded vertically in 20x1 by acquiring one of its suppliers of alloy steel plates, Keimer Steel Company. To manage the two separate businesses, the operations of Kelmer are reported separately as an investment center Garcia monitors its divisions on the basis of both unit contribution and return on average Investment (ROI), with investment defined as average operating assets employed. Management bonuses are determined on ROI. All investments in operating assets are expected to earn a minimum return of 13 percent before Income taxes. Keimer's cost of goods sold is considered to be entirely variable, while the division's administrative expenses are not dependent on volume. Selling expenses are a mixed cost with 40 percent attributed to sales volume. Keimer contemplated a capital acquisition with an estimated ROI of 14.5 percent; however, division management decided against the investment because it believed that the investment would decrease Keimer's overall ROI. The 20x2 operating statement for Kelmer follows. The division's operating assets employed were $12,600,000 at November 30, 20x2, 3 5 percent increase over the 20x1 year-end balance Keimer Steel Company Operating Statement For the Year Ended November 30, 20x2 $25,000,000 Sales revenue Less expenses: Cost of goods sold $16,500,000 3,955,000 Administrative expenses 2,700,000 Selling expenses Operating income before income taxes 23,155,000 31,845,000 Required: 1. Calculate the unit contribution for Kelmer Steel Company in 1.187,000 units were produced and sold during the year ended November 30, 2012. Round your answer to the nearest cent Check My Workmore Check W Works remaining Sales revenue $25,000,000 Less expenses Cost of goods sold $16,500,000 Administrative expenses 3,955,000 Selling expenses 2,700,000 23,155,000 Operating income before income taxes $1,845,000 Required: 1. Calculate the unit contribution for Kelmer Steel Company if 1,187,000 units were produced and sold during the year ended November 30, 2012. Round your answer to the nearest cent. per unit 2. Calculate the following performance measures for 20x2 for Keimer Steel Company: a. Pretax return on average Investment in operating assets employed (ROI). $ . Residual income calculated on the basis of average operating assets employed 3. Explain why the management of Keimer Steel Company would have been more ely to accept the contemplated capital acquisition If residual income rather than ROI were used as a performance measure. 4. Kelmer Steel Company is a separate investment center within Garcia Industries. Identify several items that Kelmer should control ir ie is to be evaluated daily by ether the ROI or residual income performance measures (CNA adapted)