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Last year s contribution format income statement for Huerra Company is given below: Total Unit Sales $ 1 , 0 0 0 , 0 0

Last years contribution format income statement for Huerra Company is given below:
Total Unit
Sales $ 1,000,000 $ 50.00
Variable expenses 600,00030.00
Contribution margin 400,00020.00
Fixed expenses 318,00015.90
Net operating income 82,0004.10
Income taxes @ 40%32,8001.64
Net income $ 49,200 $ 2.46
The company had average operating assets of $506,000 during the year.
Required:
Compute last years margin, turnover, and return on investment (ROI).
For each of the following questions, indicate whether last years 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.
Using Lean Production, the company is able to reduce the average level of inventory by $91,000.
The company achieves a cost savings of $6,000 per year by using less costly materials.
The company purchases machinery and equipment that increase average operating assets by $123,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $6,000 per year.
As a result of a more intense effort by sales people, sales are increased by 15%; operating assets remain unchanged.
At the beginning of the year, obsolete inventory is scrapped, thereby lowering net operating income by $16,000.
At the beginning of the year, the company uses $185,000 of cash (received on accounts receivable) to repurchase some of its common stock.

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