The contribution format income statement for Huerra Company for last year is given below:

	Total		Unit
Sales	$	1,000,000	$	50.00
Variable expenses		600,000		30.00
Contribution margin		400,000		20.00
Fixed expenses		318,000		15.90
Net operating income		82,000		4.10
Income taxes @ 40%		32,800		1.64
Net income	$	49,200	$	2.46

The company had average operating assets of $502,000 during the year.

5. Sales are increased by 15%; operating assets remain unchanged. (Round your answers to 2 decimal places.)

6. Obsolete inventory carried on the books at a cost of $20,000 is scrapped and written off as a loss. (Round your answers to 2 decimal places.)