The income statement for Huerra Company for last year is provided below: Total $20,800,000 12,480,000 Unit $208.00 124.80 Sales Less: Variable expenses Contribution margin Less: Fixed expense 8,320,000 4,160,000 83.20 41.60 Net operating income Less: Income taxes @ 30% 4,160,000 1.248,000 41.60 12.48 Net income $ 2,912,000 $29.12 The company had average operating assets of $13.000.000 during the year Required: 1. Compute the company's ROI for the period using the ROI formula stated in terms of margin and turnover (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (.e. 0.1234 should be entered as 12.34):) ROL 3 2.00% 2. Consider each of the following questions separately and then compute the new ROI figure. Indicate whether the ROI will increase, decrease, or remain unchanged as a result of the events described. a. By using JIT, the company is able to reduce the average level of inventory by $200,000. (The released funds are used to pay off short-term creditors.) (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (.e., 0.1234 should be entered as 12.34).) ROI % increase b. The company achieves a savings of $10 per unit by using cheaper materials (Round intermediate and final answer to 2 decimal places. ROI increase C. The company issues bonds and uses the proceeds to purchase machinery and equipment, thus increasing the average assets by $600,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new more efficient equipment reduces fixed production costs by $30,000 per year. (Round intermediate and final answer to 2 decimal places.) RON 30.00% decrease d. As a result of a more intense effort by the sales staff sales are increased by 20% operating assets remain unchanged. (Round intermediate and final answer to 2 decimal places.) 44.80% increase C. The company issues bonds and uses the proceeds to purchase machinery and equipment, thus increasing the average assets by $600,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new more efficient equipment reduces fixed production costs by $30,000 per year. (Round intermediate and final answer to 2 decimal places.) RON 30.00% decrease d. As a result of a more intense effort by the sales staff sales are increased by 20% operating assets remain unchanged. (Round intermediate and final answer to 2 decimal places.) ROL 44.80% increase e. Obsolete items of inventory carried on the records at a cost of $90,000 are scrapped and sold for 25% of the book value. (Use full amount of scrap while calculating average operating assets. Round intermediate calculation to decimal places. Enter your percentage answer founded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) RON % increase 1. The company uses $600.000 in cash received on accounts receivable) to repurchase and retire some of its common shares. The net effect of this transaction is a $600.000 change in average operating assets (Use full amount of scrap while calculating average operating assets. Round intermediate calculation to 2 decimal places. Enter your percentage answer founded to 2 decimal places i.e... 0.1234 should be entered as 12.34):) ROL % increase g. The company pays a cash dividend to its shareholders, which results in a $200,000 change in average operating assets. (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34). ROI % increase The income statement for Huerra Company for last year is provided below. Sales Less: Variable expenses Total $20,800,000 12,480,000 Unit $208,00 124.80 Contribution margin Less: Fixed expense 8,320,000 4,160,000 83.20 41.60 Net operating income Less: Income taxes @ 30% 4,160,000 1,248,000 41.60 12.48 Net income $ 2,912,000 $29.12 The company had average operating assets of $13.000.000 during the year. Required: 1. Compute the company's ROI for the period using the ROI formula stated in terms of margin and turnover. (Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i... 0.1234 should be entered as 12.34).) ROI b. The company achieves a savings of $10 per unit by using cheaper materials (Round intermediate and final answer to 2 decimal places.) ROI % increase c. The company issues bonds and uses the proceeds to purchase machinery and equipment, thus increasing the average assets by $600,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new more efficient equipment reduces fixed production costs by $30,000 per year. (Round intermediate and final answer to 2 decimal places.) ROI % decrease d. As a result of a more intense effort by the sales staff, sales are increased by 20%, operating assets remain unchanged. (Round intermediate and final answer to 2 decimal places.) ROI increase e. Obsolete items of inventory carried on the records at a cost of $90,000 are scrapped and sold for 25% of the book value. (Use full amount of scrap while calculating average operating assets. Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) ROI % increase f. The company uses $600,000 in cash (received on accounts receivable) to repurchase and retire some of its common shares. The net effect of this transaction is a $600,000 change in average operating assets. (Use full amount of scrap while calculating average operating assets. Round intermediate calculation to 2 decimal places. Enter your percentage answer rounded to 2 decimal places (i.e. 0.1234 should be entered as 12.34).) ROL 1% increase