The following information relates to last year's operations at the Dairy Division of Carrefour Bahrain: Minimum required rate of return Return on investment (ROI) Sales Turnover (on operating assets) 11% 14.4% $ 970,000 6 times What was the Dairy Division's net operating income last year? O $139,680 O $106,700 $32,980 $23,280

The following information relates to last year's operations at the Dairy Division of Carrefour Bahrain: Minimum required rate of return Return on investment (ROI) Sales Turnover (on operating assets) 11% 14.4% $ 970,000 6 times What was the Dairy Division's net operating income last year? O $139,680 O $106,700 $32,980 $23,280

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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#1 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: This Year New Line Next Year New product line Info Company Oveall Info: Sales $10,000,000.00 $ 2,000,000.00 $12,000,000.00 Sales $2,000,000.00 ROI 15% Variable expenses $6,000,000.00 $7,200,000.00 Variable expenses 60% of sales Invest in operating $1,000,000.00 Contribution margin $4,000,000.00 $4,800,000.00 Fixed expenses $640,000.00 Fixed expenses $3,200,000.00 $ 640,000.00 $3,840,000.00 Net Operating Income Net operating income $800,000.00 $960,000.00 Divisional operating assets $4,000,000.00 $ 1,000,000.00 $5,000,000.00 Margin…
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The company had an overall return on investment (ROI) of 15% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $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 Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself. 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. 4. If you were in Dell Havasi's position, would you accept or reject the new product line? Explain. 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product…
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