QUESTION 1 The following data are used to demonstrate purchasing's potential profit-leverage and return on assets effects. Selected data are provided in the table below: Earnings & Expenses Sales $1,500,000 Merchandise Costs $750,000 Net Income $52,500 Selected Balance Sheet Items Merchandise Inventory $480,000 Total Assets $1,200,000 What effect would a 4% reduction in merchandise costs have profit margin and return on assets? Further, by how much would sales have to increase to achieve the same improvement in net income as created by the 4% reduction in merchandise costs? Round the dollar calculations for Earnings & Expenses and Selected Balance Sheet Items to the nearest penny. Round all other values to four decimal places. When entering values, do not include $ signs or commas. Enter your Profit Margin and Return on Assets values as proportions (e.g., .0543) not as percentages. Baseline New Value Earnings & Expenses Sales $1,500,000 $750,000 Merchandise Costs Net Income $52,500 Selected Balance Sheet Items $480,000 Merchandise Inventory Total Assets $1,200,000 Profit Margin Return on Assets Question Completion Status: Profit Margin Return on Assets Change in Sales for Same NI Change