Answer:
1. 20.0%
2. 16.0%
Step-by-step explanation:
1. Computation for the Office Products Division's ROI for the most recent year
Using this formula
ROI = Net operating income /Divisional average operating assets
Let plug in the formula
ROI= $800000/$4000000
ROI= 20.0%
Therefore the Office Products Division's ROI for the most recent year will be 20%
2. Computation for the ROI as it would appear if the new product line is added.
First step is to calculate the Net operating income using this formula
Net operating income = Sales - Variable expenses - Fixed expenses
Let plug in the formula
Net operating income= $2000000 - (60% x $2000000) - $640000
Net operating income= $160000
Now let compute the ROI
ROI = $160000/$1000000
ROI = 16.0%
Therefore the ROI as it would appear if the new product line is added is 16.0%