The contribution format income statement for Huerra Company for last year is given below:
Total Unit
Sales $990,000 $49.50
Variable expenses
594,000
29.70
Contribution margin 396,000 19.80
Fixed expenses
316,000
15.80
Net operating income 80,000 4.00
Income taxes 40 %
32,000
1.60
Net operating income
$48,000
$2.40
The company had average operating assets of $510,000 during the year.
Requirement 1:
Compute the company's return on investment (ROI) for the period using the ROI formula stated in terms of margin and turnover.