The Consumer Services Division Is One Part of Vargas Corporation

question 1

Essay

The Consumer Services Division is one part of Vargas Corporation.The Consumer Services Division reported income of $112,000 on an investment in operating assets of $800,000 for Year 1.The division expects this level of performance to continue for Year 2.Senior management of Vargas Corporation has asked the Consumer Services Division to consider adding a new service line that would result in the following revenues and costs: $\begin{array}{|l|r|}\hline \text { Revenues } & \$ \quad 240,000 \\\hline \text { Variable expenses } & 110,000 \\\hline \text { Direct fixed expenses } & 70,000 \\\hline \text { Average operating assets } & 500,000\\\hline\end{array}$ Required:
1)Compute the ROI that would be generated by the new product line.
2)Compute the ROI for the Consumer Services Division without the new product line.
3)Compute the Consumer Services Division's residual income without the new product line and with the new product line.The target ROI is 11%.
4)Would the new product line benefit the company as a whole? ROI for the company as a whole is 10%.Will the Consumer Services Division likely add the new product line given the company's use of ROI as a performance measure? Why or why not? Which performance evaluation measure will more likely motivate the division manager to do what is best for the company as a whole?

Master the process of adapting sales strategies in response to buyer behavior and feedback.

Understand the impact of brain injuries on language development and how it differs between children and adults.

Recognize the importance of early sign language development in children, particularly in non-verbal communication situations.

Comprehend the basic linguistic concepts such as morphemes and their role in language structure.

---

Definitions:

Format Painter

A tool in many software applications that allows the user to copy formatting from one part of a document to another, ensuring uniformity with a single click.

SmartArt Button

A feature in Microsoft Office programs used to access the SmartArt tool, allowing users to easily insert and customize graphical diagrams and charts into their documents.

Underline Color

A formatting option allowing text to be underlined with a specific color, enhancing document design and emphasis.

Picture Border Button

A tool in graphics and document editing software that allows users to add or customize the border of an image or photo.