Question

Income Statement  
Sales   $191,140
Costs Except Depreciation   (99,590)
EBITDA   $91,550
Depreciation   (6,010)
EBIT   $85,540
Interest Expense (net)   (570)
Pretax Income   $84,970
Income Tax   (29,740)
Net Income   $55,230

and the percent of sales method, forecast Jim's Espresso expects sales to grow by 10.5% next year. Using the following statements а. Costs b. Depreciation c. Net Income d. Cash e. Accounts receivable f. Inventory g. Property, plant, and equipment (Note: Make sure to round all intermediate calculations to at least five decimal places.) The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. а. Costs The forecasted costs will be $211,210 (Round to the nearest dollar and enter all numbers as positive.)

Balance Sheet  
Assets  
Cash and Equivalents   $15,070
Accounts Receivable   2,040
Inventories   4,070
Total Current Assets   $21,180
Property, Plant and Equipment   9,980
Total Assets   $31,160
  
Liabilities and Equity  
Accounts Payable   $1,510
Debt   3,940
Total Liabilities   $5,450
Stockholders' Equity   25,710
Total Liabilities and Equity   $31,160

I'm trying to find forecasted cost the answer I got was wrong. The question has multiple parts, but I am just asking for helping with part a. Thank you!

Answer 1

Answer :- Calculation of the forecasted costs :-

Current year cost % of sales = $99,590 / $191,140

Current year cost % of sales = 52.10317045%

Forecasted sales = $191,140 *110.5% = $211,209.7

Forecasted Cost = $211,209.7 *52.10317045%

Forecasted Cost = $110,046.95 or $110,047 ( rounded)

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