Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hi, I just need help with these. Thanks Last year's contribution format income statement for Huerra Company is given below: The company had average operating

Hi, I just need help with these. Thanks

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Last year's contribution format income statement for Huerra Company is given below: The company had average operating assets of $497,000 during the year. Required: 1. Compute last year's margin, turnover, and return on investment (ROl). For each of the following questions, indicate whether last year's margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI. Consider each question separately. 2. Using Lean Production, the company is able to reduce the average level of inventory by $110,000. 3. The company achieves a cost savings of $6,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increase average operating assets by $121,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $3,000 per year. 5. As a result of a more intense effort by sales people, sales are increased by 25%; operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory is scrapped, thereby lowering net operating income by $15,000. 7. At the beginning of the year, the company uses $180,000 of cash (received on accounts receivable) to repurchase some of its common stock. The company achieves a cost savings of $6,000 per year by using less costly materials. Note: Round your intermediate calculations and final answer to 2 decimal places. The company purchases machinery and equipment that increase average operating assets by $121,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $3,000 per year. Note: Do not round intermediate calculations and round your final answers to 2 decimal places. As a result of a more intense effort by sales people, sales are increased by 25%; operating assets remain unchanged. Note: Round your intermediate calculations and final answer to 2 decimal places. At the beginning of the year, obsolete inventory is scrapped, thereby lowering net operating income by $15,000. Note: Round your intermediate calculations and final answer to 2 decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Harrison, Horngren, Thomas

1st Edition

0558823513, 978-0558823511

More Books

Students also viewed these Accounting questions

Question

Describe forecasting requirements.

Answered: 1 week ago