The contribution format income statement for Huerra Company for last year is given below: Unit Total $ 4,000,000 $ 80.00 56.00 24.00 16.80 7.20 2.16 $ 252,000 $ 5.04 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 30% Net income 2,800,000 1,200,000 840,000 360,000 108,000 The company had average operating assets of $2,000,000 during the year. 5. As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss. 7. At the beginning of the year, the company uses $200,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock Effect Margin Turnover ROl 0 0 0 0