Question

Suppose in its income statement for the year ended June 30, 2022, The Clorox Company reported the following condensed data (dollars in millions). Salaries and wages expenses $460 Research and development expense $ 114 Depreciation expense 90 Income tax expense 276 Sales revenue 5,730 Loss on disposal of plant assets 46 Interest expense 161 Cost of goods sold 3,104 Advertising expense 499 Rent expense 105 Sales returns and allowances 280 Utilities expense Assume a tax rate of 34%.

Answer 1

($5,730 x 125% --> Current sale is increased by 25%] ($280 x 125% --> Current sale returns and allowances is increased by 25%] $6,813 $3,880 [$3,104 x 125% --> Current sale returns and allowances is increased by 25%] $2,933 Gross Profit Rate = (Gross Profit / Net Sales Revenue) x 100 The Colorox Company Income Statement For The Year Ended June 30, 2022 (amounts in millions) Sales Revenue $7,163 Less: Sales Returns and Allowances $350 Net Sales Revenue Cost of Goods Sold Gross Profit Expenses: Salaries and Wages Expense $460 Depreciation Expense $90 Advertising Expense $839 Research & Development Expense $114 Loss on Disposal of Plant Assets $46 Rent Expense $105 Utilities Expense $60 Interest Expenses $161 Total Expenses excluding taxes Income Before Income Taxes Income Taxes Net Income [$499 + $340] Gross Profit Net Sales Revenue Gross Profit Rate $2,933 $6,813 43.0% ($2933/$6813) x 100] Profit Margin = (Net Income / Net Sales Revenue) x 100 $1,875 $1,058 $360 ($1058 x 34%] $698 Net Income Net Sales Revenue Profit Margin $698 $6,813 10.2% ($698 / $6813) x 100]