Austin Grocers recently reported the following 2012 income statement (in millions of dollars): Sales………………………………………………………………………..700 Operating costs including depreciation………………………………………500 EBIT……………………………………………………………………….$200 Interest………………………………………………………………………..40 EBT…………………………………………………………………………$160 Taxes (40%)……………………………………………………………………64 Net income………………………………………………………………….$ 96 Dividends……………………………………………………………………$32 Addition to retained earnings………………………………………………$ 6 For the coming year, the company is forecasting a 25% increase in sales; and it expects that its year-end operating costs, including depreciation, will equal 70% of sales. Austin’s tax rate, interest expense, and dividend payout ratio are all expected to remain constant. a. What is Austin’s projected 2013 net income? b. What is the expected growth rate in Austin’s dividends? Austin Grocers recently reported the following 2012 income statement in

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter2: Basic Cost Management Concepts

Section: Chapter Questions

Problem 4CE: Refer to Cornerstone Exercises 2.2 and 2.3. Next year, Pietro expects to produce 50,000 units and...

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Austin Grocers recently reported the following 2012 income statement (in millions of dollars):

Sales………………………………………………………………………..700

Operating costs including depreciation………………………………………500

EBIT……………………………………………………………………….$200

Interest………………………………………………………………………..40

EBT…………………………………………………………………………$160

Taxes (40%)……………………………………………………………………64

Net income………………………………………………………………….$ 96

Dividends……………………………………………………………………$32

Addition to retained earnings………………………………………………$ 6

For the coming year, the company is forecasting a 25% increase in sales; and it expects that its year-end operating costs, including depreciation, will equal 70% of sales. Austin’s tax rate, interest expense, and dividend payout ratio are all expected to remain constant.

a. What is Austin’s projected 2013 net income?

b. What is the expected growth rate in Austin’s dividends?

Austin Grocers recently reported the following 2012 income statement in

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