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

sales: total: $996,000 unit: $49.80

Var expenses: total: $597,600 unit: $29.88

Contribution margin: total: $398,400 unit: $19.92

Fixed expenses: total: $314,400 unit: $15.72

Net Operating Income: total: $84,000 unit: $4.20

Income taxes @40%: total: $33,600 unit: $1.68

Net Income: total $50,400 unit $2.52

The company had average operating assets of $499,000 during the year.

1) compute the companies margin, turnover, and return on investment for the.

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 question number one above.

2) Using lean production, the company is able to reduce the average level of inventory by $109,000

3) The company achieves a cost savings of $14,000 per year by using less costly materials

4) The company purchases machinery and equipment that increases average operating assets by $122,000. Sales remain unchanged. The new more efficient equipment reduces production cost by $7000 per year

5) sales are increased by 10%, 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, thereby lowering net operating income

7) At the beginning of the year the company uses $197,000 of cash received on accounts receivable to re-purchase