$\backslash$table$[[,$Total,Unit$],[$Sates$,$$ $990,060,$$ $49\mathrm{.}50],[$Variable expenses,$594,088,29\mathrm{.}78],[$Contribet ion margin,$396,{06}^a,19\mathrm{.}88],[$Fixed expenses,$318,080,15,98],[$Net operating incone,$78,096,3\mathrm{.}98],[$Incone taxes e $4$bu$,31,200,1,56],[$Net incose,$ $46,8$ eb$,52\mathrm{.}34]]$

The company had average operating assets of $$505\mathrm{.}000$ during the year.

Requitred:

Compute last year's margin, turnover, and return on imvestment $($ROD$).$

For each of the foftowing questions, indicate whether last year's margin and turnover will increase, decrease, or remain unchanged as a result of the events described, and then compute the new ROI. Consider each question separately.

$2.$ Using Lean Production, the company is able to reduce the average level of imventory by $$100,000.($The released funds are used to pay off short$-$term creditors.$)$

$3.$ The company achieves a cost savings of $$10,000$ per year by using less costly materials.

$4.$ The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $$127,000.$ Interest on the bonds is $$11,000$ per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $$4,000$ per year.

$5.$ As a result of a more intense effort by salespeople, sales are increased by $15\%$; operating assets remain unchanged.

$5.$ At the beginning of the year, obsolete inventory is scrapped, thereby lowering net operating by $$20,000.$

$7.$ At the beginning of the year, the company uses $$180,000$ of cash $($recelved on accounts recelvable$)$ to repurchase and retire some of its common stock.

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Required $2$

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$8$ of $10$

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