Dr. Zhivàgo Diagnostics Corporation's income statement for 20X1 is as follows:Sales$ 2,880,000Cost of goods sold2,130,000Gross profit$ 750,000Selling and administrative expense300,000Operating profit$ 450,000Interest expense52,100Income before taxes$ 397,900Taxes (30%)119,370Income after taxes$ 278,530Compute the profit margin for 20X1.Note: Input the profit margin as a percent rounded to 2 decimal places. 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.

The objective of the question is to calculate the profit margin for the year 20X1 and to predict the…

Answered: Dr. Zhivàgo Diagnostics Corporation's…

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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Question

Dr. Zhivàgo Diagnostics Corporation's income statement for 20X1 is as follows:

Sales	$ 2,880,000
Cost of goods sold	2,130,000
Gross profit	$ 750,000
Selling and administrative expense	300,000
Operating profit	$ 450,000
Interest expense	52,100
Income before taxes	$ 397,900
Taxes (30%)	119,370
Income after taxes	$ 278,530

Compute the profit margin for 20X1.

Note: Input the profit margin as a percent rounded to 2 decimal places.
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.

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