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

	Total		Unit
Sales	$	1,010,000	$	50.50
Variable expenses		606,000		30.30
Contribution margin		404,000		20.20
Fixed expenses		326,000		16.30
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 $502,000 during the year.

4.

The company issues bonds and uses the proceeds to purchase $125,000 in machinery and equipment at the beginning of the period. Interest on the bonds is $11,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year. (Round your answers to 2 decimal places.)

			Effect
Margin		%
Turnover
ROI		%

5.

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

			Effect
Margin		%
Turnover
ROI		%

6.

Obsolete inventory carried on the books at a cost of $15,000 is scrapped and written off as a loss.(Round your answers to 2 decimal places.)

			Effect
Margin		%
Turnover
ROI		%

7.	The company uses $183,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. (Round your answers to 2 decimal places.)

			Effect
Margin		%
Turnover
ROI		%