Assets Operating Costs Business Performance before Improvement Questions 1 (20 points) Basted on the Business Performance calculation below, through sourcing and negotiation effort, the company is able to reduce the Materials cost by 6% (i.e., Materials cost becomes $2,162 and Inventory cost becomes $470). Please provide clear calculation on how the 6% reduction of Materials cost may affect Profit Margin, Asset Turnover Ratio, and ROI. LABOR SALES $5,000 $700 MINUS NET INCOME MATERIALS $2,300 COGS $3,800 $400 PROFIT MARGIN DIVIDED BY OVERHEAD $800 OTHER COSTS $800 SALES $5,000 INVENTORY $500 SALES $5,000 RECEIVABLE $300 Current Assets Asset Turnover DIVIDED BY $1,100 Ratio 1.25 Total Assets PLUS CASH $4,000 $300 Fixed Assets $2,900 MULTIPLY ROI 10.0%