Use the following information to determine the changes in the following: cost of service failures (including invoice discount, rehandling cost, lost sales), net income, and Return on Assets.

Order fill increases from 88% to 93% with an average inventory increase of 15%, a 10% increase in warehousing, 5% increase in transportation costs, and an increase in inventory carrying cost from 15% to 17%.

Of orders not filled correctly, 70% may be rectified with an invoice discount of 10% and additional handling per rectified order of $2.

• Average price per order $15
• Cost of Goods sold per order $7
• Annual orders 35,000
• Cash $25,000
• Accounts receivable $15,000
• Fixed assets $500,000
• Warehousing cost $30,000
• Other operating costs $100,000
• Tax rate 20% of (EBIT-interest)
• Transportation cost $38,000
• Average inventory $40,000
• Interest cost $12,000