Question: PLEASE HELP! I can't seem to figure it out and the ones here are wrong! Minimum required rate of return on operating assets is 12%.

PLEASE HELP!

I can't seem to figure it out and the ones here are wrong! Minimum required rate of return on operating assets is 12%.

PLEASE HELP! I can't seem to figure it out and the ones

"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 I make any move. Our division's return on investment (ROI) 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 company's Office Products Division for the most recent year are given below: Sales Variable expenses $ 10,000,000 6,000,000 Contribution margin Fixed expenses 4,000,000 3,200,000 Net operating income S 800.000 Divisional operating assets $ 4,000,000 The company had an overall return on investment (ROI) of 15% last year (considering all divisions). The Office Products Division has an opportunity to add a new product line that would require an additional investment in operating assets of $1,000,000. The cost and revenue characteristics of the new product line per year would be: Sales Variable expenses Fixed expenses $2,000,000 60% of sales $640,000 Required: 1. Compute the Office Products Division's ROI for the most recent year; also compute the ROI as it would appear if the new product line is added. (Round the "Turnover", "ROI" answers to 1 decimal place.) Present New Line Total Sales Net operating income Operating assets Margin Turnover % % 8 % ROI % % % a. Compute the Office Products Division's residual income for the most recent year, also compute the residual income as it would appear if the new product line is added. Present New Line Total % % % Operating assets Minimum required return Minimum net operating income Actual net operating income Minimum net operating income Residual income $ 0 $ 0 $

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