"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 rois. operating results for the company's office products division for the most recent year are given below: sales $10,000,000 variable expenses 6,000,000 contribution margin 4,000,000 fixed expenses 3,200,000 net operating income $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 $2,000,000 variable expenses 60% of sales fixed expenses $640,000 requirement 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 your answers to 1 decimal place. omit the "%" sign in your response.) roi present % new line % total for company % i calculated that present is 20% and total for the company is 19.2% but i can't get the correct roi for new line. please help calculate the roi for new line.
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Category: business | Author: Sarah Aksinia
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