Dr. Zhivàgo Diagnostics Corp.'s income statement for 20X1 is as follows: Sales $ 2,970,000 Cost of goods sold 1,600,000 Gross profit $ 1,370,000 Selling and administrative expense 375,000 Operating profit $ 995,000 Interest expense 57,000 Income before taxes $ 938,000 Taxes (30%) 281,400 Income after taxes $ 656,600 a. Compute the profit margin for 20X1. (Input the profit margin as a percent rounded to 2 decimal places.) b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? (Input the profit margin as a percent rounded to 2 decimal places.) Income after taxes ......................... Profit margin
Dr. Zhivàgo Diagnostics Corp.'s income statement for 20X1 is as follows: Sales $ 2,970,000 Cost of goods sold 1,600,000 Gross profit $ 1,370,000 Selling and administrative expense 375,000 Operating profit $ 995,000 Interest expense 57,000 Income before taxes $ 938,000 Taxes (30%) 281,400 Income after taxes $ 656,600 a. Compute the profit margin for 20X1. (Input the profit margin as a percent rounded to 2 decimal places.) b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? (Input the profit margin as a percent rounded to 2 decimal places.) Income after taxes ......................... Profit margin
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...
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Dr. Zhivàgo Diagnostics Corp.'s income statement for 20X1 is as follows:
| Sales | $ | 2,970,000 |
| Cost of goods sold | 1,600,000 | |
| Gross profit | $ | 1,370,000 |
| Selling and administrative expense | 375,000 | |
| Operating profit | $ | 995,000 |
| Interest expense | 57,000 | |
| Income before taxes | $ | 938,000 |
| Taxes (30%) | 281,400 | |
| Income after taxes | $ | 656,600 |
a. Compute the profit margin for 20X1. (Input the profit margin as a percent rounded to 2 decimal places.)
b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 20X2? (Input the profit margin as a percent rounded to 2 decimal places.)
| Income after taxes | ......................... | |
| Profit margin |
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