Flingen Inc. reveals the following information in its annual report for FY 2021 Income Statement Items Sales $11,000,000 Cost of goods sold $5,700,000 Pretax earnings $800,000 Selected Balance Sheet Items Merchandise inventory $100,000 Total assets $2,500,000 Management plans to cut cost of goods sold by 6% for the upcoming year while retaining the same sales. What will Flingen's profit leverage effect be for 2022? (Select the closest answer to your calculation of profit leverage).
Flingen Inc. reveals the following information in its annual report for FY 2021 Income Statement Items Sales $11,000,000 Cost of goods sold $5,700,000 Pretax earnings $800,000 Selected Balance Sheet Items Merchandise inventory $100,000 Total assets $2,500,000 Management plans to cut cost of goods sold by 6% for the upcoming year while retaining the same sales. What will Flingen's profit leverage effect be for 2022? (Select the closest answer to your calculation of profit leverage).
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
Chapter22: Accounting For Changes And Errors.
Section: Chapter Questions
Problem 4RE: Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020....
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Question
Flingen Inc. reveals the following information in its annual report for FY 2021
Income Statement Items | |
Sales | $11,000,000 |
Cost of goods sold | $5,700,000 |
Pretax earnings | $800,000 |
| |
Selected Balance Sheet Items | |
Merchandise inventory | $100,000 |
Total assets | $2,500,000 |
Management plans to cut cost of goods sold by 6% for the upcoming year while retaining the same sales. What will Flingen's profit leverage effect be for 2022? (Select the closest answer to your calculation of profit leverage).
Group of answer choices
$13.05
$10.40
$9.63
$11.15
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