The contribution format income statement for Huerra Company for last year is given below: S Unit S 50.00 30.00 20.00 Sales Variable expenses Contribution margin Fixed expenses Net operating income Income taxes @ 40% Net income Total 1,000,000 600,000 400,000 322,000 78,000 31,200 46,800 18.10 3.00 1.58 2.34 $ $ The company had average operating assets of $507.000 during the year. Required: 1. Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover. (Round your intermediate calculations and final answer to 2 decimal places.) Margin Turnover ROI 7.80% 1.971 15.38% 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 $97,000. (The released funds are used to pay off short-term creditors.) (Round your answers to 2 decimal places.) 7.80% Margin Turnover ROI Effect Unchanged Increase Increase 19.00% 3. The company achieves a cost savings of $10,000 per year by using less costly materials. (Round your answers to 2 decimal places.) % Margin Turnover ROI Effect increase funchanged Increase 17.37 % 4. The company issues bonds and uses the proceeds to purchase $120,000 in machinery and equipment at the beginning of the period. Interest on the bonds is $19.000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $4,000 per year. (Round your answers to 2 decimal places.) Margin Effect Increase % Decrease Turnover ROI 13.00% Decrease Decrease 5. Sales are increased by 15%; operating assets remain unchanged. (Round your answers to 2 decimal places.) Effect increase Margin % Increase Turnover ROI % increase 6. Obsolete inventory carried on the books at a cost of $15,000 is scrapped and written off as a loss. (Round your answers to 2 decimal places.) Margin Turnover ROI Effect Decrease Increase (Decrease % 7. The company uses $178,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. (Round your answers to 2 decimal places.) % Margin Turnover ROI Effect unchanged Increase Increase 1 %