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The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 996,000 $ 49.80 Variable expenses 597,600 29.88

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

Total Unit
Sales $ 996,000 $ 49.80
Variable expenses 597,600 29.88
Contribution margin 398,400 19.92
Fixed expenses 320,400 16.02
Net operating income 78,000 3.90
Income taxes @ 40% 31,200 1.56
Net income $ 46,800 $ 2.34

The company had average operating assets of $496,000 during the year.

5. As a result of a more intense effort by salespeople, 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 $177,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock.

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