I know headquarters wants us to add on that new product line, said .docx - "I know headquarters wants us to add on that new product line said Dell

I know headquarters wants us to add on that new product line, said .docx

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"I know headquarters wants us to add on 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 has led the company for three years, and I don't want any letdown." Billings Company is a decentralized organization with five autonomous divisions. The divisions are evaluated on the basis of the return that they are able to generate on invested assets, with year-end bonuses given to the divisional managers who have the highest ROI figures. Operating results for the company's office products division for the most recent year are as follows: Sales Less: Variable expenses $180,000,000 117,000,000 Contribution margin Less: Fixed expenses 63,000,000 50,400,000 Net operating income $ 12,600,000 Divisional operating assets $ 72,000,000 The company had an overall ROI of 13.5% 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 $18,000,000. The cost and revenue
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  • Spring '19
  • Prof. Adnan Hamideh

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