Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,440,000 1,460,000 Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes $ 980,000 373,000 $ 607,000 53,500 Profit margin $ 553,500 166,050 $ 387,450 a. Compute the profit margin for 20X1. Note: Input the profit margin as a percent rounded to 2 decimal places. b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. T other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income an for 20X2? Note: Input the profit margin as a percent rounded to 2 decimal places.
Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,440,000 1,460,000 Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes $ 980,000 373,000 $ 607,000 53,500 Profit margin $ 553,500 166,050 $ 387,450 a. Compute the profit margin for 20X1. Note: Input the profit margin as a percent rounded to 2 decimal places. b. Assume that in 20X2, sales increase by 10 percent and cost of goods sold increases by 20 percent. T other expenses the same. Assume a tax rate of 30 percent on income before taxes. What is income an for 20X2? Note: Input the profit margin as a percent rounded to 2 decimal places.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows:
$ 2,440,000
1,460,000
Sales
Cost of goods sold
Gross profit
Selling and administrative expense
Operating profit
Interest expense
Income before taxes
Taxes (30%)
Income after taxes
Profit margin
a. Compute the profit margin for 20X1.
Note: Input the profit margin as a percent rounded to 2 decimal places.
Income after taxes
Profit margin
$ 980,000
373,000
$607,000
b. Assume that 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. Assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin
for 20X2?
Note: Input the profit margin as a percent rounded to 2 decimal places.
20X2
53,500
$ 553,500
166,050
$ 387,450
%
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