Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The contribution format income statement for Huerra Company for last year is given below Sales Variable expenses Contribution margin Fixed expenses Het operating income Income

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
The contribution format income statement for Huerra Company for last year is given below Sales Variable expenses Contribution margin Fixed expenses Het operating income Income taxes 30% Net Income Total $ 4,000,000 2,800,000 1,200,000 340.000 360,000 100,000 5 252,000 Unit $ 80.00 56.00 24.00 16.30 7.20 2.16 $ 5.04 The company had average operating assets of $2,000,000 during the year. Required: 1. Compute the company's margin, turnover, and return on investment (RON) 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 (1) above 2. Using Lean Production, the company is able to reduce the average level of inventory by $400,000 3. The company achieves a cost savings of $32,000 per year by using less costly materials. 4. The company purchases machinery and equipment that increases average operating assets by $500,000. Sales remain unchanged The new, more efficient equipment reduces production costs by $20,000 per year 5. As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss. CUTITIOTI STOCK. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Required 5 Required 6 Required 7 Compute the company's margin, turnover, and return on investment (ROI) for the period. (Round your answers to 2 places.) % Margin Turnover ROI Required 1 Required 2 Required 3 Required 4 The company achieves a cost savings of $32,000 per year places.) Effect % Margin Turnover ROI %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Top Accounting And Auditing Issues For 2021 CPE Course

Authors: CCH Tax Law Editors

1st Edition

0808055348, 978-0808055341

More Books

Students also viewed these Accounting questions