Question
The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 1,006,000 $ 50.30 Variable expenses 603,600 30.18
The contribution format income statement for Huerra Company for last year is given below: |
Total | Unit | ||||
Sales | $ | 1,006,000 | $ | 50.30 | |
Variable expenses | 603,600 | 30.18 | |||
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Contribution margin | 402,400 | 20.12 | |||
Fixed expenses | 322,400 | 16.12 | |||
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Net operating income | 80,000 | 4.00 | |||
Income taxes @ 40% | 32,000 | 1.60 | |||
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Net income | $ | 48,000 | $ | 2.40 | |
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The company had average operating assets of $490,000 during the year. |
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4. The company issues bonds and uses the proceeds to purchase $123,000 in machinery and equipment at the beginning of the period. Interest on the bonds is $18,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $6,000 per year. (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
Margin: _______% | Effect |
Turnover: _______ | |
ROI: _______% |
5. | Sales are increased by 20%; operating assets remain unchanged. (Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
6. Obsolete inventory carried on the books at a cost of $17,000 is scrapped and written off as a loss.(Round your Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
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