The contribution format income statement for Westex, Inc., for its most recent period is given...
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Accounting
The contribution format income statement for Westex, Inc., for its most recent period is given below:
Total
Unit
Sales
$
996,000
$
49.80
Variable expenses
597,600
29.88
Contribution margin
398,400
19.92
Fixed expenses
316,400
15.82
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 $503,000 during the period.
Required:
1.
Compute the companys return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your answer to 2 decimal places.)
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 original ROI computed in (1) above.
2.
The company achieves a cost savings of $11,000 per period by using less costly materials. (Round your answers to 2 decimal places.)
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