Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for...

  

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Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for last year are given below: Sales $27,000,000 16,200,000 Variable expenses 10,800,000 Contribution margin Fixed expenses 8,805,000 Net operating income $1,995,000 Divisional operating assets The Northern Division has an opportunity to add a new product line as follows: Required investment Net operating income Adams Corporation's minimum acceptable rate of return Required: Compute the following: Northern Division ROI for last year Northern Division ROI if new product line is added Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on ROI. Northern Division residual income for last year Northern Division residual income if the new product line is added $9,500,000 Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on residual income. $2,500,000 $400,000 15% ACCEPT Adams Corporation evaluates divisional managers based on ROI. Operating results for the company's Northern Division for last year are given below: Sales $27,000,000 16,200,000 Variable expenses 10,800,000 Contribution margin Fixed expenses 8,805,000 Net operating income $1,995,000 Divisional operating assets The Northern Division has an opportunity to add a new product line as follows: Required investment Net operating income Adams Corporation's minimum acceptable rate of return Required: Compute the following: Northern Division ROI for last year Northern Division ROI if new product line is added Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on ROI. Northern Division residual income for last year Northern Division residual income if the new product line is added $9,500,000 Determine whether the Northern Division manager will ACCEPT or REJECT the new product line based on residual income. $2,500,000 $400,000 15% ACCEPT

Answer rating: 100% (QA)

Answer 1 Northern division ROI for last year net operating income operating assets 19950009500000 21 ... View the full answer