The contribution format income statement for Huecia Company for last year is given below: Unit Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 30% Net operating income Total $4,000,000 2,800,000 1,200,000 840,000 360,000 108,000 $ 252,000 $80.00 56.00 24.00 16.80 7.20 2.16 $ 5.04 The company had average operating assets of $2,000,000 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. Consider each question separately (independently), 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 $400,000. Sales and profits will remain the same. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $32,000 per year by using less costly materials. 4. The company reduces fixed expenses by $100,000 by cutting advertising. This results in a 10% reduction in sales. Assets remain unchanged. 5. As a result of a more intense effort by salespeople, sales are increased by 20%; fixed costs and operating assets remain unchanged. 6. Obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss. 7. The company uses $200,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock