The contribution format income statement for Huerra Company for last year is giv

Question

The contribution format income statement for Huerra Company for last year is given below: Total Sales Variable expenses Unit $1,004,000 $50.20 602,400 30.12 Contribution margin Fixed expenses 401,600 20.08 319,600 15.98 Net operating income Income taxes @ 40% 82,000 32,800 4.10 1.64 Net income $ 49,200 2.46 The company had average operating assets of $505,000 during the year Requirec 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 Turnover answer to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Margin Turnover ROI 24.34

Explanation / Answer

Ans-1) Sales margin = 49200/1004000 = 4.9%

Capital Turnover = 1004000/505000 = 198.8%

ROI = Sales margin/Turnover = 2.46%

Ans - 2) Sales margin = 105600/1004000 =10.51%

Capital Turnover = 244%

ROI = Sales margin/Turnover = 4.3%

Ans -3) Sales margin = 58200/1004000 = 5.79%

Capital Turnover = 1004000/505000 = 198.8%

ROI = Sales margin/Turnover = 2.91%

Ans -4) Sales margin = 36200/1004000 = 3.6%

Capital Turnover = 1004000/505000 = 158.8%

ROI = Sales margin/Turnover = 2.27%

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