req 2-7 is the same concept by the graph
The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $1,004,000 $50.20 Variable 602,400 30.12 expenses Contribution 20.08 401,600 margin Fixed expenses Net operating income 317,600 15.88 84,000 4.20 Income taxes e 33,600 1.68 40% $ 50,400 $ 2.52 Net income The company had average operating assets of $502,000 during the year 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 $95,000. (The released funds 3. The company achieves a cost savings of $11,000 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 $126,000. Interest on the bonds is $17,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year. 5. As a result of a more intense effort by salespeople, 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 $20,000 used to pay off short-term creditors.) scrapped and written off as a loss. 7. At the beginning of the year, the company uses $184,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Required 1 2 3 4 6 7 Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your intermediate calculations and final answers to 2 decimal places.) Show less Margin Turnover ROI Required 1 Required 2 The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales Variable $1,004,000 $50.20 602,400 30.12 expenses Contribution 401,600 20.08 margin Fixed expenses Net operating income Income taxes 317,600 15.88 84,000 4.20 33,600 1.68 40% 50,400 2.52 Net income The company had average operating assets of $502,000 during the year 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 uncanged as a result of the events described, and then compute the new ROI figure. Consider each question eparately, starting in each case from the data used to 2. Using Lean Production, the company is able to reduce the average level of inventory by $95,000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $11,000 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 $126,000. Interest on the bonds is $17,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year. 5. As a result of a more intense effort by salespeople, 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 $20,000 is scrapped and written off as a loss . At the beginning of the year, the company uses $184,000 of cash (received on accounts receivable) to repurchase ctort ompute the oriainal ROL in (1) above. and retire some of its common stock. Complete this question by entering your answers in the tabs below. Required Required Required Required Required Required Required 2 3 5 6 1 4 7 Using Lean Production, the company is able to reduce the average level of inventory by $95,000. (The released funds are used to pay off short-term creditors.) (Round your intermediate calculations and final answers to 2 decimal places.) Show less A Effect Margi Unchanged %Decrease Turnover RO Required 1 Required 3
