Last years contribution format income statement for Huerra Company is given below: Total Unit Sales $ 1,002,000 $ 50.10 Variable expenses 601,200 30.06 Contribution margin 400,800 20.04 Fixed expenses 320,800 16.04 Net operating income 80,000 4.00 Income taxes @ 40% 32,000 1.60 Net income $ 48,000 $ 2.40 The company had average operating assets of $497,000 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 its common stock.

Margin

Turnover

ROI