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 notround intermediate calculations. Round your final answer to the nearest whole number.)ROIPresentO AcceptReject%New Line2. If you were in Grenier's position, would you accept or reject the new product line?%Residual incomeTotal3. 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.AcceptReject%4. Suppose that the company's minimum required rate of return on operating assets is 12% and that performance is evaluated usingresidual income.a. Compute East Division's residual income for last year, also compute the residual income as it would appear if the new product linewere added.PresentNew LineTotalb. Under these circumstances, if you were in Grenier's position, would you accept or reject the new product line? Faced with headquarters' desire to add a new product line, Stefan Grenier, manager of Bilti Products' East Division, felt that he had tosee the numbers before he made a move. His division's ROI has led the company for three years, and he doesn't want any letdown.Bilti Products is a decentralized wholesaler with four autonomous divisions. The divisions are evaluated on the basis of ROI, with year-end bonuses given to divisional managers who have the highest ROI. Operating results for the company's East Division for last yearare given below:SalesVariable expensesContribution marginFixed expensesOperating incomeDivisional operating assetsThe company had an overall ROI of 13% last year (considering all divisions). The new product line that headquarters wants Grenier'sEast Division to add would require an investment of $4,300,000. The cost and revenue characteristics of the new product line per yearwould be as follows:SalesVariable expensesFixed expenses$ 12,900,00060% of sales$30,100,00014,570,00015,530,00013,122,000$ 2,408,000$ 7,525,000$ 4,515,000

Return on investment (ROI) is a financial performance metric used to assess how effectively assets…

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. Round your final answer to the nearest whole number.) ROI Present Accept Reject % New Line 2. If you were in Grenier's position, would you accept or reject the new product line? % Residual income Total 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. O Adding the new line would increase the company's overall ROI. Accept Reject % 4. Suppose that the company's minimum required rate of return on operating assets is 12% 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 b. Under these circumstances, if you were in Grenier's position, would you accept or reject the new product line?

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. Round your final answer to the nearest whole number.) ROI Present Accept Reject % New Line 2. If you were in Grenier's position, would you accept or reject the new product line? % Residual income Total 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. O Adding the new line would increase the company's overall ROI. Accept Reject % 4. Suppose that the company's minimum required rate of return on operating assets is 12% 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 b. Under these circumstances, if you were in Grenier's position, would you accept or reject the new product line?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

!
!
TRUE OR FALSE.. If the company cannot sell its fixed assets for the meantime, it is better for the firm to continue the operations even if it is losing provided the total revenue can cover the total variable cost and partial of the fixed cost.
QUESTION 4 A firm's economic profit is usually higher than its accounting profit True False
2. Benson Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 14,000 pounds of raw chicken that costs $7,450, the company produces two parts: 2,500 pounds of drumsticks and 4,500 pounds of breast for a processing cost of $2,466. The chicken breast is further processed into 3,700 pounds of steak for a processing cost of $1,700. The market price of drumsticks per pound is $1.40 and the market price per pound of chicken steak is $3.70. If Benson decided to sell chicken breast instead of chicken steak, the price per pound would be $2.20. a-3. If the drumsticks are producing a loss, should that product line be eliminated? The drumstick product line be eliminated. b-1. Reallocate the joint cost to the joint products, drumsticks and breasts, using relative market values as the allocation base. Total cost…
Calculate operating surplus if:- Rent and interest = $600 Corporate tax = $400 Dividend = $1500 Undistributed profit = $660
kk.2
Pls help with what you can really appreciated
7 8 Part 3: Economic Ordering Quantity 9 1. Calculate the company's EOQ for Engine Valve A1100 (make sure to link values to the other tabs): 10 11 Estimated Annual Sales this year: 12 Ordering cost for each order: 13 Carrying Cost per unit 14 15 EOQ: 16 units units 17 2. Complete the table below by linking to the appropriate cells in the other tabs: 18 19 Order Size Total Total Carrying Cost Ordering Cost 24 20 21 28 29 30 22222222223 25 26 5 10 20 50 100 27 3. Create a graph of both the Carrying and Ordering cost. Make sure your EOQ ties to where the two lines cross. Rename your Chart to: Cost of Ordering & Carrying Inventory L
Q1.b. In response to a request from your immediate supervisor, you have prepared a CVP graph portraying the cost and revenue characteristics of your company's product and operations. Explain how the lines on the graph and the break-even points would change if (1) the selling price per unit decrease, (2) fixed cost increased throughout the entire range of activity portrayed on the graph, and (3) variable cost per unit increased. S18000 $1.000 52000 $100.000 $15.00 $50,00 525.000 50 la T S speakers nak
A large company operated in several businesses, including computers, disk drives, financial services, and defense satellites. Each business operated as a self-contained division. However, due to an economic downturn and changing market conditions, the company sold its noncore businesses of financial services and defense satellites in order to focus only on computer-related products. However, after making these sales, its costs were still high. a. What was the root cause of the problem? b. What structural changes needs to be made to resolve it? Justify
1