Last year's contribution format income statement for Huerra Company is given below: Total Unit Sales 3 1,666,666 $ 56.36 Variable expenses 663,666 36.18 Contribution margin 462,466 26.12 Fixed expenses 326,466 16.62 Net operating income 82,666 4.16 Income taxes @ 46% 32,866 1.64 Net income $ 49,259 $ 2-46 The company had average operating assets of $500,000 during the year. Required: 1. Compute last year's margin, turnover, and return on investment (ROI). 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 ofinventory by $94,000. 3. The company achieves a cost savings of $8,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increase average operating assets by $125,000. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year. 5. As a result ofa more intense effort by sales people sales are increased by 10%; operating assets remain unchanged. 6. At the beginning ofthe year obsolete inventory is scrapped, thereby lowering net operating income by $16 000. 7. At the beginning ofthe year the company uses $180, 000 of cash (received on accounts receivable) to repurchase some ofits common stock. 6 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Compute last year's margin, turnover, and return on investment (ROI). Note: Round your intermediate calcuiations and final answer to 2 decimal places. Margin 8.15 a % Turnover 2.01 a ROI 16.40 a 0/u Required 2 > 6 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Using Lean Production, the company is able to reduce the average level of inventory by $94,000. Note: Round your intermediate calculations and final answer to 2 decimal places. Margin 8.15 O % Unchanged Q Turnover 3.19 6 Increase Q ROI 13.45 9 % Increase Q 0 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 The company achieves a cost savings of $8,000 per year by using less costly materials. Note: Round your intermediate calculations and final answer to 2 decimal places. Margin 6.46 6 % Decrease 0 Turnover 2.08 9 Increase 9 ROI 13.45 9 % Decrease 0 9 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 The company purchases machinery and equipment that increase average operating assets by $125,000. Sales remain unchanged. The new, more efcient equipment reduces production costs by $4,000 per year. Note: Do not round intermediate calculations and round your final answers to 2 decimal places. Margin % Turnover ROI % 6 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 As a result of a more intense effort by sales people, sales are increased by 10%; operating assets remain unchanged. Note: Round your intermediate calculations and final answer to 2 decimal places. Margin 8.156 % Decrease Q Turnover 2.01 o Decrease 9 ROI 16.40 9 % Decrease 9 0 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 At the beginning of the year, obsolete inventory is scrapped, thereby lowering net operating income by $16,000. Note: Round your intermediate calculations and final answer to 2 decimal places. Margin \"/0 Turnover ROI % 9 Answer is not complete. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 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. Note: Round your intermediate calculations and final answer to 2 decimal places. Margin 8.15 a % Unchanged o Turnover 3.19 0 Increase o ROI 26.03 9 % Increase o ( Required 6