Answer correctly

18. 10.00 points "I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before l make any move. Our division's return on investment (RO) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to the divisional managers who have the highest ROls. Operating results for the companys office Products Division for the most recent year are given below: 22,440,000 Sales Variable expenses 14,094,600 Contribution margin 8,345,400 Fixed expenses 6,130,000 Net operating income 2,215,400 Divisional operating assets 4,480,000 The company had an overall return on investment (ROI) of 18.00% last year divisions). The Office Products Division has an opportunity to add a new product line that would require an additional investment in operating assets of $2,430,600. cost and revenue characteristics of the new product line per year would be: Sales 9,705,000 Variable expenses 65% of sales Fixed expenses 2,591,710