For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI figure. Consider each question separately, starting in each case from the data used to compute the original ROI in (1) above.

2. Using Lean Production, the company is able to reduce the average level of inventory by $105,000.

3. The company achieves a cost savings of $12,000 per year by using less costly materials.

4. The company purchases machinery and equipment that increases average operating assets by $125,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $5,000 per year.

The contribution format Income statement for Huerra Company for last year is given below: Sales variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income Total $ 998,eee 598, see 399,200 319, 2ee 80, eee 32, eee $ 48, eee Unit $ 49.90 29.94 19.96 15.96 4.00 1.60 $ 2.40 The company had average operating assets of $501,000 during the year