The contribution format income statement for Huerra Company for last year is given below: The company had average operat

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The contribution format income statement for Huerra Company for
last year is given below:
The company had average operating assets of $495,000 during the
year.
Required:
1. Compute the company’s margin, turnover, and return on
investment (ROI) 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 $93,000.
3. The company achieves a cost savings of $13,000 per year by
using less costly materials.
4. The company purchases machinery and equipment that increases
average operating assets by $124,000. Sales remain unchanged. The
new, more efficient equipment reduces production costs by $6,000
per year.
5. As a result of a more intense effort by sales people, sales
are increased by 25%; operating assets remain unchanged.
6. At the beginning of the year, obsolete inventory carried on
the books at a cost of $19,000 is scrapped and written off as a
loss, thereby lowering net operating income.
7. At the beginning of the year, the company uses $182,000 of
cash (received on accounts receivable) to repurchase some of its
common stock.