Reference no: EM132907967

The Middleton Resorts Company is a private and diverse firm, structured as investment centers, with active, autonomous sections. For the Delta Group Division a simplified summary of revenue for the last year, without charge to service departments, is the following: Recently, Delta Group Manager was invited to establish an another product portfolio.

For the new product, a predicted income made the following statement:

Anticipated Income Statement

For the Year Ended December 31,20Y6

Sales $12,960,

COGS 7,500,000

GP $5,460,000

OPEX 3,127,200

NI $ 2,332 The Division now has a total investment return of $27 000 000 while the total investment return of Middleton Resorts Company, including all divisions. The dividing return on investments is used to assess each divisional manager. For every percentage point of the division's return on investment above the average of the corporation, a bonus is given in 58,000 increments. The chairman is worried that, despite all the estimate that the product range would be successful and would improve total company incomes, the manager of the Delta Group division refused the inclusion of the new product line. The Delta Group Management Team declined the new line of goods you were requested to investigate the probable causes.

Problem 1. For the Delta Group Division to determine the return on investment in the preceding year

Problem 2. Set bonus for the past year for the Manager of the Delta Group Division.

Problem 3. Determine the new product line's expected return on investment. Entire percentage of one decimal place and two decimal places investment turnover.

Problem 4. Why may the Delta Group Division manager decide not to accept the new product portfolio? Assume that the new line is being introduced in the Specialty products section and the actual operational output of 20Y6 was comparable to that of 20Y5 and support your answer by establishing the predicted return on investment for 20Y6.