The contribution format income statement for Westex, Inc , for its most recent period is given below Total Unit Sales $ 994,000 $ 49 70 Variable expenses 596,400 29 82 Contribution margin 397,600 19 88 Fixed expenses 319,600 15 98 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 $508,000 during the period Required 1 Compute the company u2019s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover (Round your intermediate calculations and final answers to 2 decimal places ) ROI 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 original ROI computed in (1) above 2 The company achieves a cost savings of $15,000 per period by using less costly materials (Round your intermediate calculations and final answers to 2 decimal places ) Effect Margin (Click to select) Increase Unchanged Decrease Turnover (Click to select) Increase Decrease Unchanged ROI (Click to select) Decrease Unchanged Increase 3 Using Lean Production, the company is able to reduce the average level of inventory by $100,000 (The released funds are used to pay off bank loans ) (Round your intermediate calculations and final answers to 2 decimal places ) Effect Margin (Click to select) Unchanged Decrease Increase Turnover (Click to select) Increase Decrease Unchanged ROI (Click to select) Increase Unchanged Decrease 4 Sales are increased by $198,800 operating assets remain unchanged (Round your intermediate calculations and final answers to 2 decimal places ) Effect Margin (Click to select) Decrease Unchanged Increase Turnover (Click to select) Decrease Increase Unchanged ROI (Click to select) Unchanged Increase Decrease 5 The company issues bonds and uses the proceeds to purchase $129,000 in machinery and equipment at the beginning of the period Interest on the bonds is $12,000 per period Sales remain unchanged The new, more efficient equipment reduces production costs by $4,000 per period (Round your intermediate calculations and final answers to 2 decimal places ) Effect Margin (Click to select) Increase Unchanged Decrease Turnover (Click to select) Unchanged Increase Decrease ROI (Click to select) Unchanged Decrease Increase 6 The company invests $183,000 of cash (received on accounts receivable) in a plot of land that is to be held for possible future use as a plant site (Round your intermediate calculations and final answers to 2 decimal places ) Effect Margin (Click to select) Increase Decrease Unchanged Turnover (Click to select) Increase Unchanged Decrease ROI (Click to select) Unchanged Increase Decrease 7 Obsolete inventory carried on the books at a cost of $20,000 is scrapped and written off as a loss (Round your intermediate calculations and final answers to 2 decimal places ) Effect Margin (Click to select) Decrease Unchanged Increase Turnover (Click to select) Increase Decrease Unchanged ROI (Click to select) Increase Decrease Unchanged

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The contribution format income statement for Westex, Inc., for its most recent period is given below: Total Unit Sales $ 994,000 $ 49.70 Variable expenses

The contribution format income statement for Westex, Inc., for its most recent period is given below:

	Total		Unit
Sales	$	994,000	$	49.70
Variable expenses		596,400		29.82

Contribution margin		397,600		19.88
Fixed expenses		319,600		15.98

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 $508,000 during the period.

Required:
1.	Compute the company%u2019s return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your intermediate calculations and final answers to 2 decimal places.)

ROI

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 original ROI computed in (1) above.

2.	The company achieves a cost savings of $15,000 per period by using less costly materials. (Round your intermediate calculations and final answers to 2 decimal places.)

		Effect
Margin	%
Turnover
ROI	%

3.	Using Lean Production, the company is able to reduce the average level of inventory by $100,000. (The released funds are used to pay off bank loans.) (Round your intermediate calculations and final answers to 2 decimal places.)

		Effect
Margin	%
Turnover
ROI	%

4.	Sales are increased by $198,800; operating assets remain unchanged. (Round your intermediate calculations and final answers to 2 decimal places.)

		Effect
Margin	%
Turnover
ROI	%

The company issues bonds and uses the proceeds to purchase $129,000 in machinery and equipment at the beginning of the period. Interest on the bonds is $12,000 per period. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per period. (Round your intermediate calculations and final answers to 2 decimal places.)

		Effect
Margin	%
Turnover
ROI	%

6.	The company invests $183,000 of cash (received on accounts receivable) in a plot of land that is to be held for possible future use as a plant site. (Round your intermediate calculations and final answers to 2 decimal places.)

		Effect
Margin	%
Turnover
ROI	%

7.	Obsolete inventory carried on the books at a cost of $20,000 is scrapped and written off as a loss. (Round your intermediate calculations and final answers to 2 decimal places.)