... turnoverrate1. 25 MultiplyCash$300,000Accountreceivable$300,000Inventories $50 0,000AssetsLabor$700,000Materials$2,300,000Overhead$800,000Operating cost elements( $51 5,000)($3,6 85, 000)($2,1 85, 000)(10.3%)(1.26)($3,9 75, 000)($1,0 75, 000)($4 75, 000)(13.0%)What if wedecreasematerials costby 5% ?(or $1 15, 000)Sales $5, 000,000Net income$400,000Divided ... increase = new sales X .08•$1 15, 000 = new sales X .08• new sales = $1,437 ,50 01-16 The Impact on ROI of Reducing Materials Costs vs. Increasing Sales•therefore… •($1,437 ,50 0 / $5, 000,000) ... onInvestments10.0%Total assets$4,000,000Sales $5, 000,000Divided byProfitmargin8%Asset turnoverrate1. 25 MultiplyCash$300,000Accountreceivable$300,000Inventories $50 0,000AssetsLabor$700,000Materials$2,300,000Overhead$800,000Operating...