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The contribution format income statement for Huerra Company for last year is given below: Total Sales Variable expenses Unit $1,008,000 $50.40 604,800 30.24 Contribution margin Fixed expenses 403,200 20.16 321,200 16.06 Net operating income Income taxes @ 40% 82,000 32,800 4.10 1.64 Net income $ 49,200 2.46 The company had average operating assets of $510,000 during the year Required 1. Compute the company's return on investment (ROI) for the period using the ROl formula stated in terms of margin and turnover. (Round your Turnover answer to 2 decimal places. Round your Margin and ROl percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Margin Turnover 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 data used to compute the original RO in (1) above 2. Using Lean Production, the company is able to reduce the average level of inventory by $97,000. (The released funds are used to pay off short-term creditors.) (Round your Turnover answer to 2 decimal places. Round your Margin and ROl percentage answers to 2 decimal placesi.e., 0.1234 should be entered as 12.34).) Effect Margin Turnover ROI

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