BC 266: EXCEL PROBLEM PR 17-2A:VERTICAL ANALYSIS   For 2016, Indigo Corp. initiated a sales promotion campaign that included an expenditure of $39,000 for advertising. At year end the company President is presented with the following condensed Comparative Income Statement:     20162015   Sales revenue $820,000 $600,000 COGS [Cost of Goods Sold]311,600240,000 Gross profit508,400360,000 Selling expenses 164,000 108,000 Administrative expenses 57,40054,000 Total operating expenses 221,400162,000 Income from operations [NOI] 287,000 198,000 Other income 65,600 48,000 Income before income tax 352,600 246,000 Income tax expense246,000180,000 Net Income [NI] 106,600 66,000 Prepare a Comparative Income Statement using Vertical Analysis for the two-year period. Present each item as a % of sales for the given year and round your values to one decimal place.

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P18-2 Vertical analysis [20–30 min] The McConnell Department Stores Pty Ltd's chief executive officer (CEO) has asked you to compare the company's profit performance and financial position with the average for the industry. The CEO has given you the company's income statement and balance sheet, as well as the industry average data for retailers. MCCONNELL DEPARTMENT STORES PTY LTD Income statement compared with industry average for the year ended 31 December 2016 McConnell Industry average Net sales $778 000 100.0% Cost of sales 522 816 65.8 $255 184 Gross profit Selling and general expenses 34.2 161 046 19.7 Other expenses 4 668 0.4 Profit $ 89 470 14.1% MCCONNELL DEPARTMENT STORES PTY LTD Balance sheet compared with industry average as at 31 December 2016 McConnell Industry average Current assets $325 440 70.9% Property, plant and equipment, net Intangible assets, net 120 960 23.6 8 640 0.8 Other assets 24 960 4.7 Total assets $480 000 100.0% Current liabilities $222 720 48.1…

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90 Marston Corporation Statement of Income for the Year Ending December 31, 2022 Using Sales Agents Using Own Sales Force $26,000,000 Sales Cost of goods sold Variable Fixed Gross margin Marketing costs Commissions Fixed costs Operating income $11,700,000 2,870,000 4,680,000 3,420,000 $26,000,000 14,570,000 11,430,000 8,100,000 $ 3,330,000 $11,700,000 2,870,000 2,600,000 5,500,000 14,570,000 11,430,000 8,100,000 $ 3,330,000 Marston is considering hiring its own sales staff to replace the network of agents. Marston will pay its salespeople a commission of 10% and incur additional fixed costs of $2,080,000. 4 Required 1. Calculate Marston Corporation's 2022 contribution margin percentage, breakeven revenues, and degree of operating leverage under each of the two scenarios. (You will first have to recast the 2022 statement of income assuming Marston had hired its own sales staff.) 2. Describe the advantages and disadvantages of each type of sales alternative. 3. In 2023, Marston uses its…

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Analyzing profitability Camden Company has divided its business into segments based on sales territories: East Coast, Midland, and West Coast. Following are financial data for 2018: Prepare an income statement for Camden Company for 2018 using the contribution margin format assuming total fixed costs for the company Were $435,000. Include columns for each business segment and a column for the total company.

Operating results for department B of Shaw Company during 2016 are as follows: Sales   $755,000 Cost of goods sold   480,000 Gross profit   275,000 Direct expenses   215,000 Common expenses   123,000 Total expenses   338,000 Net loss   $(63,000)   If department B could maintain the same physical volume of product sold while raising selling prices an average of 10% and making an additional advertising expenditure of $35,000, what would be the effect on the department's net income or net loss? (Ignore income tax in your calculations.) Use a negative sign with your answer to indicate if the effect increases the company's net loss. If Department B increased its selling price by 10%, the effect on net income (loss) would be $Answer

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