Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,790,000 2.070.000 $720,000 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 350.000 $ 370,000 51,400 a. Compute the profit margin for 20X1. Note: Input the profit margin as a percent rounded to 2 decimal places. % $ 318,600 95,580 $223,020

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows:
$ 2,790,000
2,070,000
Sales
Cost of goods sold
Gross profit
Selling and administrative expense
Operating profit
Interest expense
Income before taxes
Taxes (30%)
Income after taxes
a. Compute the profit margin for 20X1.
Note: Input the profit margin as a percent rounded to 2 decimal places.
Profit margin
$ 720.000
350.000
$ 370,000
51.400
$ 318,600
95 580
$223,920
%
Transcribed Image Text:Dr. Zhivago Diagnostics Corporation's income statement for 20X1 is as follows: $ 2,790,000 2,070,000 Sales Cost of goods sold Gross profit Selling and administrative expense Operating profit Interest expense Income before taxes Taxes (30%) Income after taxes a. Compute the profit margin for 20X1. Note: Input the profit margin as a percent rounded to 2 decimal places. Profit margin $ 720.000 350.000 $ 370,000 51.400 $ 318,600 95 580 $223,920 %
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.
Income after taxes
Profit margin
20X2
Transcribed Image Text: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. Income after taxes Profit margin 20X2
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