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 @ 40% Net income Total 994,000 596,400 397,600 319,600 78,000 Unit $ 49.70 29.82 19.88 15.98 3.90 1.56 $ 2.34 31,200 46,800 $ The company had average operating assets of $506,000 during the year. 5. As a result of a more intense effort by sales people, 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 $18,000 is scrapped and written off as a loss. 7. At the beginning of the year, the company uses $183,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock