Case 3: Reduce Cost of Goods Sold Change in ROA % $9.50 Price $ Sales 1,200 Quantity $ Gross Margin Net Profit $ % Net Margin $ $7.25 Cost of Goods Cost of Goods Sold 1,200 Quantity Sales % Return on Assets Total Expenses Variable Expenses 5.00% Transportation 2.00% Handling 2.00% Storage 3.00% Promotions $840 Fixed Expenses Sales Asset Turnover Inventory Current Assets Total Assets Accounts Receivable Fixed Assets $1,000 Other Current Assets . . The Base Case: . Price of microchips: $9.50 Quantity of Microchips the firm sells at $10 under current logistics practices: 1,200 Cost of Goods (to produce a microchip): $7.50 Variable Costs o Transportation: 5% of sales revenue o Handling: 2% of sales revenue o Storage: 2% of sales revenue o Promotions: 3% of sales revenue Fixed Expenses: $840.00 Inventory Costs: 25% of Sales revenue Accounts Receivable: 20% of Sales revenue Other Current Assets: $1,000 Fixed Assets: $6,500 . . Case3: Starting from the Base Case, you recommend better logistics operations practices, allowing you to keep less work-in-progress and raw material inventory, reducing Cost of Goods from $7.50 to $7.25 per unit with no change in service to your customers