The contribution format Income statement for Huerra Company for last year is given below: Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 486 Net income Total Unit $ 1,000,000 $ 58.ee 600.ee 30.ee 488,888 20.ee 324,800 16.20 76,000 3.88 38.400 1.52 $ 45.600 $ 2.28 The company had average operating assets of $492,000 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 $106.000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9.000 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 $124.000. Interest on the bonds is $12.000 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 salespeople, sales are increased by 25%: operating assets remain unchanged. 6. At the beginning of the year, obsolete Inventory carried on the books at a cost of $17.000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required s Required 6 Required 7 Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and tumover. (Round your intermediate calculations and final answers to 2 decimal places.) Margin Turnover ROI Required 1 Required 2 > The contribution format Income statement for Huerra Company for last year is given below: Sales Variable expenses Contribution margin Fixed expenses Net operating Income Income taxes @ 486 Net income Total Unit $ 1,800,eee $ 50.ee bee.ee 30.se 400.000 20.ee 324,00 16.28 76.eee 3.88 30,400 1.52 $ 45,6e8 $ 2.28 The company had average operating assets of $492,000 during the year. Required: 1. Compute the company's return on investment (RO) 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 (I) above. 2. Using Lean Production, the company is able to reduce the average level of Inventory by $106.000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9.000 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 $124.000. Interest on the bonds is $12.000 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 salespeople, sales are increased by 25% operating assets remain unchanged. 6. At the beginning of the year. Obsolete Inventory carried on the books at a cost of $17,000 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 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Using Lean Production, the company is able to reduce the average level of inventory by $106,000. (The released funds are used to pay off short-term creditors.) (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin Turnover ROI The contribution format Income statement for Huerra Company for last year is given below. Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 486 Net Income Total $ 1.800.000 see.ece 488,88 324, eee 76.800 38, 4ee $ 45,600 Unit $ 50.ee 30.ee 20.00 16.20 3.se 1.52 $ 2.28 The company had average operating assets of $492.000 during the year. Required: 1. Compute the company's return on investment (RO) 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 () above. 2 Using Lean Production, the company is able to reduce the average level of Inventory by $106,000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9.000 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 $124.000. Interest on the bonds is $12.000 per year. Sales remain unchanged. The new. more efficient equipment reduces production costs by 56,000 per year. 5. As a result of a more intense effort by salespeople, sales are increased by 25%; operating assets remain unchanged. 6. At the beginning of the year, obsolete Inventory carried on the books at a cost of $17.000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 The company achieves a cost savings of $9,000 per year by using less costly materials. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin Turnover RO The contribution format income statement for Huerra Company for last year is given below: Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 48% Net income Total $ 1.000.000 6e8,eee 400.ee 324,800 76.800 30,400 $ 45,600 Unit $ 58.ee 3e.ee 20.ee 16.28 3.80 1.52 $ 2.28 The company had average operating assets of $492.000 during the year. Required: 1. Compute the company's return on investment (RO) 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 $106.000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9,000 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 $124.000. Interest on the bonds is $12.000 per year. Sales remain unchanged. The new. more efficient equipment reduces production costs by S6,000 per year. 5. As a result of a more intense effort by salespeople, sales are increased by 25%: operating assets remain unchanged. 6. At the beginning of the year, obsolete Inventory carried on the books at a cost of $17,000 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. Complete this question by entering your answers in the tabs below. Required: Required 2 Required 3 Required Required 5 Required 6 Required 7 The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $124,000. Interest on the bonds is $12,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by 56,000 per year. Do not round intermediate calculations and round your final answers to 2 decimal places.) Show less Effect Margin Turnover ROI The contribution format Income statement for Huerra Company for last year is given below. Sales Variable expenses Contribution margin Fixed expenses Net operating incorre Income taxes 4605 Net income Total $ 1.000.000 see,800 400.000 324, eee 76,00 38,400 $ 45,600 Unit $ 50.ee 30.00 20.ee 16.28 3.30 1.52 $ 2.28 The company had average operating assets of $492,000 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 $106.000. The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9.000 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 $124.000. Interest on the bonds is $12.000 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 salespeople sales are increased by 25%: operating assets remain unchanged. 6. At the beginning of the year. obsolete Inventory carried on the books at a cost of $17,000 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 recevable) to repurchase and retire some of its common stock Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required Required Required 6 Required 7 As a result of a more intense effort by salespeople, sales are increased by 25%; operating assets remain unchanged. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin Turnover ROI The contribution format Income statement for Huerra Company for last year is given below: Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes 48x Net Income Total $ 1.000.000 6ee,eee 499,00 324.ee 76,000 38,400 $ 45,600 Unit $ se.ee 38.00 28.ee 16.20 3.80 1.52 $ 2.28 The company had average operating assets of $492,000 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 $106.000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9,000 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 $124.000. Interest on the bonds is $12.000 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 salespeople, sales are increased by 25%: operating assets remain unchanged. 6. At the beginning of the year, obsolete Inventory carried on the books at a cost of $17,000 is scrapped and written off as a loss. 7. At the beginning of the year, the company uses $179.000 of cash trecelved on accounts receivable) to repurchase and retire some of its common stock. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 At the beginning of the year, obsolete inventory carried on the books at a cost of $17,000 is scrapped and written off as a loss. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin Turnover ROI The contribution format Income statement for Huerra Company for last year is given below: Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @4805 Net income Total $ 1.000.000 see, eee 400.000 324.800 76.680 30,400 $ 45, see Unit $ 50.ee 30.ee 20.00 16,20 3.88 1.52 $ 2.28 The company had average operating assets of $492,000 during the year. Required: 1. Compute the company's return on investment (Ron 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 $106,000. (The released funds are used to pay off short-term creditors.) 3. The company achieves a cost savings of $9,000 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 $124.000. Interest on the bonds is $12.000 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 salespeople, sales are increased by 25%: operating assets remain unchanged. 6. At the beginning of the year, obsolete Inventory carried on the books at a cost of $17,000 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. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required Required 6 Required 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. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin Turnover ROI
