Question
please answer ASAP The contribution format income statement for Huerra company for last year is given below: total unit Sales $106,000 $50.30 Variable exp 603,600
please answer ASAP
The contribution format income statement for Huerra company for last year is given below:
total | unit | |
Sales | $106,000 | $50.30 |
Variable exp | 603,600 | 30.18 |
contribution margin | 402,400 | 20.12 |
fixed exp | 324,400 | 16.22 |
net op income | 78,000 | 3.9 |
income taxes @40$ | 31,200 | 1.56 |
net income | 46,800 | 2.34 |
The company's average operating assets were $490,000
Required:
(1) Compute the company's return on investment (ROI) for the period using the roi formula stated in terms of margin and turnover
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 $96,000. (The released funds are used to pay off short-term creditors.)
3. The company achieves a cost savings of $6,000 per year by using less costly materials.
4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $123,000. Interest on the bonds is $11,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $6,000 per year.
5. As a result of a more intense effort by sales people, sales are increased by 15%; operating assets remain unchanged.
6. At the beginning of the year, obsolete inventory carried on the books at a cost of $16,000 is scrapped and written off as a loss.
7. At the beginning of the year, The company uses $179,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock.
Required:
1.Margin =
Turnover =
ROI =
For 2 through 7, just state if Margin will Increase (I), Decrease (D), or remain the same (NA), Turnover will I, D, or NA.HINT: carry to the nearest 2 decimals of a %; may need to plug in numbers if both numerator and denominator move in the same direction (i.e.numerator or denominator both increase or both decrease).
2.Margin =
Turnover =
ROI =
3.Margin =
Turnover =
ROI =
4.Margin =
Turnover =
ROI =
5.Margin =
Turnover =
ROI =
6.Margin =
Turnover =
ROI =
7.Margin =
Turnover =
ROI =
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