Question

3. walue 2.77 points Dr. Zhivago Diagnostics Corp.'s income statement for 20X1 is as follows: $ 2,440,000 1,460,000 $ Sales Cost of goods sold Gross prof Selling and administrative expense Operating proft Interest expense Income before taxes 980,000 373,000 607,000 53,500 553,500 166,050 Тахеs (30%) 387 450 Income ater taxes a. Compute the profit margin for 20X1. (Input the profit margin as a percent rounded to 2 decimal places.) Profit margin b. Assume 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. Once again, 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.) 20x2 Income after taxes Profit margin eBook & Resources Hints References Hint # Check my work

Answer 1

$ $ a For the Year 2011 Sales $ Less Cost goods sold $ Gross profit $ Less Selling and adminstration Exp $ Opeartaing Profit $ Less Interest Expenses $ Income Before taxes $ Less Tax @30% $ Income after Taxe or Net income $ 2,440,000.00 1,460,000.00 980,000.00 373,000.00 607,000.00 53,500.00 553,500.00 166,050.00 387,450.00 For the Year 2012 Sales Less Cost goods sold Gross profit Less Selling and adminstration Exp Opeartaing Profit Less Interest Expenses Income Before taxes Less Tax @30% Income after Taxe or Net income 2,684,000.00 (2440000*110%) 1,752,000.00 (1460000*120%) 932,000.00 373,000.00 559,000.00 53,500.00 505,500.00 151,650.00 353,850.00 $ Profit margin Profit margin Net income/Sales (387450/2440000) 0.15879 15.88% Net income/Sales (353850/2684000) 0.13184 13.18%