WZ2F%252Fnewconnect.meducation.com 252FIL Ch 11 Problems 30 marks Halp Save & Edit Sutine 1 Check my won Faced with headquarters desire to add a new product line, Stefan Grenier manager of Products East Division, felt that he had to see the numbers before he made a move. His division' Rol has led the company for three years, and he doesn't want any lotdown Bit Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of Row year-end bonuses given to divisional managers who have the highest ROI Operating results for the company's Eat Dision for lot year are given below: 10 points 0001 ale Variable expen Contribution margin Fixed expenses Operating income Divisional operating at $34,300,000 15.110,000 19.190,000 16,446,000 Holences The company had an overall ROI of 16% last year (considering all divisions). The new product line that headquarters wants Grenier's East 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 $34,700,000 701 of sales 5. 3,520,000 Required: 1. Compute the East Division's ROI for last year, also compute the ROI as it would appear if the new product line were added. (Do not round intermediate calculations.) Prey 1 of 3 Next > Mc wconnecmeducation.com%252 11 Problems 30 marks Saved Help 1 Present Now Line Total ROI % % 00:05:13 2. If you were in Grenier's position, would you accept or reject the new product line? Cook Accept Reject int ences 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? Adding the new line would decrease the company's overall ROI Adding the new line would increase the company's overall ROI. 4. Suppose that the company's minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income. a. Compute East Division's residual income for last year, also compute the residual income as it would appear if the new product line were added Present New Line Total Residual income Prey 1 of 318 Next > oblems 30 marks browser-anchurahttp%253A%252F%252Fwconnect theducation.com/2525 Help Save Sub You have FIVE MINUTES remaining to complete your work Check Accept Reject 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? Adding the new line would decrease the company's overall ROI. Adding the new line would increase the company's overall ROL 4. Suppose that the company's minimum required rate of return on operating assets is 15% and that performance is evaluated using 59 residual income. a. Compute East Division's residual income for last year, also compute the residual income as it would appear if the new product line were added. Present New Line Total Residual income b. Under these circumstances, if you were in Grenier's position, would you accept or reject the new product line? Accept O Reject Prev 1 of 3 Next > stv A WZ2F%252Fnewconnect.meducation.com 252FIL Ch 11 Problems 30 marks Halp Save & Edit Sutine 1 Check my won Faced with headquarters desire to add a new product line, Stefan Grenier manager of Products East Division, felt that he had to see the numbers before he made a move. His division' Rol has led the company for three years, and he doesn't want any lotdown Bit Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of Row year-end bonuses given to divisional managers who have the highest ROI Operating results for the company's Eat Dision for lot year are given below: 10 points 0001 ale Variable expen Contribution margin Fixed expenses Operating income Divisional operating at $34,300,000 15.110,000 19.190,000 16,446,000 Holences The company had an overall ROI of 16% last year (considering all divisions). The new product line that headquarters wants Grenier's East 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 $34,700,000 701 of sales 5. 3,520,000 Required: 1. Compute the East Division's ROI for last year, also compute the ROI as it would appear if the new product line were added. (Do not round intermediate calculations.) Prey 1 of 3 Next > Mc wconnecmeducation.com%252 11 Problems 30 marks Saved Help 1 Present Now Line Total ROI % % 00:05:13 2. If you were in Grenier's position, would you accept or reject the new product line? Cook Accept Reject int ences 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? Adding the new line would decrease the company's overall ROI Adding the new line would increase the company's overall ROI. 4. Suppose that the company's minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income. a. Compute East Division's residual income for last year, also compute the residual income as it would appear if the new product line were added Present New Line Total Residual income Prey 1 of 318 Next > oblems 30 marks browser-anchurahttp%253A%252F%252Fwconnect theducation.com/2525 Help Save Sub You have FIVE MINUTES remaining to complete your work Check Accept Reject 3. Why do you suppose headquarters is anxious for the East Division to add the new product line? Adding the new line would decrease the company's overall ROI. Adding the new line would increase the company's overall ROL 4. Suppose that the company's minimum required rate of return on operating assets is 15% and that performance is evaluated using 59 residual income. a. Compute East Division's residual income for last year, also compute the residual income as it would appear if the new product line were added. Present New Line Total Residual income b. Under these circumstances, if you were in Grenier's position, would you accept or reject the new product line? Accept O Reject Prev 1 of 3 Next > stv A