Last year's contribution format income statement for Huerra Company is given below:
The company had average operating assets of $ during the year.
Required:
Compute last year's margin, turnover, and return on investment ROI
For each of the following questions, indicate whether last year's margin and turnover will increase, decrease, or remain unchanged
as a result of the events described, and then compute the new ROI. Consider each question separately.
Using Lean Production, the company is able to reduce the average level of inventory by $
The company achieves a cost savings of $ per year by using less costly materials.
The company purchases machinery and equipment that increase average operating assets by $ Sales remain unchanged.
The new, more efficient equipment reduces production costs by $ per year.
As a result of a more intense effort by sales people, sales are increased by ; operating assets remain unchanged.
At the beginning of the year, obsolete inventory is scrapped, thereby lowering net operating income by $
At the beginning of the year, the company uses $ of cash received on accounts receivable to repurchase some of its
