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The contribution format income statement for Huerra Company for last year is given below:
| | Total | Unit |
| Sales | $ | 1,000,000 | $ | 50.00 |
| Variable expenses | | 600,000 | | 30.00 |
| Contribution margin | | 400,000 | | 20.00 |
| Fixed expenses | | 318,000 | | 15.90 |
| Net operating income | | 82,000 | | 4.10 |
| Income taxes @ 40% | | 32,800 | | 1.64 |
| Net income | $ | 49,200 | $ | 2.46 |
| |
The company had average operating assets of $502,000 during the year.
5. Sales are increased by 15%; operating assets remain unchanged. (Round your answers to 2 decimal places.)
6. Obsolete inventory carried on the books at a cost of $20,000 is scrapped and written off as a loss. (Round your answers to 2 decimal places.)
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