The contribution format income statement for Huerra Company for last year is given below: Total Unit Sales $ 4,000,000 $ 80.00 Variable expenses 2,800,000 56.00 Contribution margin 1,200,000 24.00 Fixed expenses 840,000 16.80 Net operating income 360,000 7.20 Income taxes @ 30% 108,000 2.16 Net income $ 252,000 $ 5.04 The company had average operating assets of $2,000,000 during the year. 4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $500,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $20,000 per year. 5. As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged. 6. At the beginning of the year, obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss. 7. At the beginning of the year, the company uses $200,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. REQUIED 4 The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $500,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $20,000 per year. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % REQUIRED 5 As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % REQUIRED 6 At the beginning of the year, obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI % REQUIRED 7 At the beginning of the year, the company uses $200,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. (Round your intermediate calculations and final answers to 2 decimal places.) Effect Margin % Turnover ROI %
The contribution format income statement for Huerra Company for last year is given below:
| Total | Unit | |||
| Sales | $ | 4,000,000 | $ | 80.00 |
| Variable expenses | 2,800,000 | 56.00 | ||
| Contribution margin | 1,200,000 | 24.00 | ||
| Fixed expenses | 840,000 | 16.80 | ||
| Net operating income | 360,000 | 7.20 | ||
| Income taxes @ 30% | 108,000 | 2.16 | ||
| Net income | $ | 252,000 | $ | 5.04 |
The company had average operating assets of $2,000,000 during the year.
4. The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $500,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $20,000 per year.
5. As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged.
6. At the beginning of the year, obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss.
7. At the beginning of the year, the company uses $200,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock.
REQUIED 4
The company issues bonds and uses the proceeds to purchase machinery and equipment that increases average operating assets by $500,000. Interest on the bonds is $60,000 per year. Sales remain unchanged. The new, more efficient equipment reduces production costs by $20,000 per year. (Round your intermediate calculations and final answers to 2 decimal places.)
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REQUIRED 5
As a result of a more intense effort by salespeople, sales are increased by 20%; operating assets remain unchanged. (Round your intermediate calculations and final answers to 2 decimal places.)
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REQUIRED 6
At the beginning of the year, obsolete inventory carried on the books at a cost of $40,000 is scrapped and written off as a loss. (Round your intermediate calculations and final answers to 2 decimal places.)
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REQUIRED 7
At the beginning of the year, the company uses $200,000 of cash (received on accounts receivable) to repurchase and retire some of its common stock. (Round your intermediate calculations and final answers to 2 decimal places.)
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