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The contribution format income statement for Huerra Company for last year is given below: The company had average operating assets of $ 4 9 9
The contribution format income statement for Huerra Company for last year is given below:
The company had average operating assets of $ during the year.
Required:
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 ROI in above.
Using Lean Production, the company is able to reduce the average level of inventory by $
The company achieves a cost savings of $ per year by using less costly materials.
The company purchases machinery and equipment that increases average operating assets by $ Sales remain unchanged.
The new, more efficient equipment reduces production costs by $ per year.
As a result of a more intense effort by sales people, sales are increased by ; operating assets remain unchanged.
At the beginning of the year, obsolete inventory carried on the books at a cost of $ is scrapped and written off as a loss,
thereby lowering net operating income.
At the beginning of the year, the company uses $ of cash received on accounts receivable to repurchase some of its
common stock.
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