The Consumer Division is one part of Violet Corporation. The Consumer Division reported income of $112,000 on

an investment in operating assets of $800,000 for Year 1. The division expects this level of performance to continue

for Year 2. Senior management of Violet Corporation has asked the Consumer Division to consider adding a new

service line that would result in the following additional revenues and costs:

Revenues

$

240,000

Variable expenses

110.000

Direct fixed expenses

70.000

Average operating assets

500.000

Required:

1) Compute the ROI that would be generated by the new product line.

2) Compute the ROI for the Consumer Division without the new product line.

3) Compute the Consumer Division's residual income without the new product line and with the new product line.

The target ROI is 11%