For the base case in this section, as a percentage of sales, COGS = 72 percent, SGA = 15 percent, R&D = 2.5 percent. Depreciation, Interest expense are fixed as stated. Tax Rate is 20 percent. 1.a Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the TaxRate, and a 5 percent increase in Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case 1% Increase in Gross Margin 1% Decrease in Tax Rate 5% Increase in Sal $ ales $ 2110 $ 2110 $ 2215.5 2,110 Cost of goods sold 1,519 1519 1594.9 Selling, general, and 317 317 317 333 administrative expense Depreciation 160 160 160 160 Research and development 53 Total costs and expenses $ 6A $ 2,049 >perating Income 61 Interest expense 39 arnings before Income Taxes $22 $ 'rovision for Income Taxes let Income 39 $ 39 $ $18 $ $ $ 39
For the base case in this section, as a percentage of sales, COGS = 72 percent, SGA = 15 percent, R&D = 2.5 percent. Depreciation, Interest expense are fixed as stated. Tax Rate is 20 percent. 1.a Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the TaxRate, and a 5 percent increase in Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case 1% Increase in Gross Margin 1% Decrease in Tax Rate 5% Increase in Sal $ ales $ 2110 $ 2110 $ 2215.5 2,110 Cost of goods sold 1,519 1519 1594.9 Selling, general, and 317 317 317 333 administrative expense Depreciation 160 160 160 160 Research and development 53 Total costs and expenses $ 6A $ 2,049 >perating Income 61 Interest expense 39 arnings before Income Taxes $22 $ 'rovision for Income Taxes let Income 39 $ 39 $ $18 $ $ $ 39
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:For the base case in this section, as a percentage of sales, COGS = 72 percent, SGA = 15 percent, R&D = 2.5 percent. Depreciation,
Interest expense are fixed as stated. Tax Rate is 20 percent.
1.a
Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the
TaxRate, and a 5 percent increase in Sales.
Colossal Chemical Corporation
Year Ended December 31, 2021
($000,000 omitted)
Base
Case
1% Increase in Gross Margin
1% Decrease in Tax Rate
5% Increase in Sal
$
ales
$
2110 $
2110
$
2215.5
2,110
Cost of goods sold
1,519
1519
1594.9
Selling, general, and
317
317
317
333
administrative expense
Depreciation
160
160
160
160
Research and development
53
Total costs and expenses
$
6A
$
2,049
>perating Income
61
Interest expense
39
arnings before Income Taxes
$22 $
'rovision for Income Taxes
let Income
39
$
39
$
$18 $
$
$
39
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