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 % Net income Total $ 600,000 400,000 320, , 32,000 $ 48, Unit $ 30.00 20.00 1.60 $ 2.40 The company had average operating assets of $504,000 during the year. Required: 1. Compute the companys margin, turnover, and return on investment (ROthe period. For each of the following questions, indicate whether the margin and turnover will increase, decrease, or remain unchanged as a result of the events describedand then compute the new figure. Consider each question separately, starting in each case from the data used to compute the original 1) above 2. Using Lean Production, the company is able to reduce the average level of inventory $94,000. 3. The company achleves a cost savings of $10,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increases average operating assets by $130,000. Sales remain unchanged. The newmore efficient equipment reduces production costs by $6,000 per year 5. As a result of a more intense effort by sales people, sales are increased by 10%, operating assets remain unchanged. At the begining of the year, obsolete mentory on books at a cost of $20,000 is scrapped and written as a loss thereby lowering net operating income. 7. At the beginning of the year, the company uses $180,000 cash (received on accounts receivableto repurchase some of its common stock

The contribution format income statement for Huerta Company for last year is given below. Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes 4x Net Income TOTAL $1,000,000 0.00 500,000 30.00 400,000 20.00 320,000 16.00 80,000 4.00 32.000 1.60 $ 45,000 $ 2.40 The company had average operating assets of $504,000 during the year. Required: 1. Compute the company's margin, turnover, and return on investment (ROI) for the period 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 Rotin () above. 2. Using Lean Production, the company is able to reduce the average level of inventory by $94.000 3. The company achieves a cost savings of $10,000 per year by using less costly materials 4 The company purchases machinery and equipment that increases average operating assets by $130.000. Solis 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 sales people, sales are increased by 10% 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 thereby lowering net operating income 7. At the beginning of the year, the company uses $180,000 of cash received on accounts receivable to repurchase some of its common stock NE