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. Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Total costs and expenses Operating Income Interest expense Provision for Income Taxes Base Case Net Income $ 2,110 1,477 317 160 51 2,005 105 39 Earnings before Income Taxes $66 $ 13 1% Increase in Gross Margin Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) $53 $ 2110 1491 317 160 51 2019 91 39 52 10 42 $ 1% Decrease in Tax Rate 2110 1477 317 160 51 2005 105 39 13 SA 66 $ 53 $ SA 5% Increase in Sal 2215 1477 317 160 51 2005 105 39 210 42 168

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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.
Sales
Cost of goods sold
Selling, general, and
administrative expense
Depreciation
Research and development
Total costs and expenses
Operating Income
Interest expense
Earnings before Income Taxes
Provision for Income Taxes
Net Income
Base
Case
$
2,110
1,477
317
160
51
2,005
105
39
13
1% Increase in Gross Margin
$
$
$66 $
Colossal Chemical Corporation
Year Ended December 31, 2021
($000,000 omitted)
$53 $
2110
1491
317
160
51
2019
91
39
52
10
42
$
$
$
$
1% Decrease in Tax Rate
2110
1477
317
160
51
2005
105
39
66
13
53
$
$
69
$
$
5% Increase in Sal
2215
1477
317
160
51
2005
105
39
210
42
168
Transcribed Image Text: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. Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income Base Case $ 2,110 1,477 317 160 51 2,005 105 39 13 1% Increase in Gross Margin $ $ $66 $ Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) $53 $ 2110 1491 317 160 51 2019 91 39 52 10 42 $ $ $ $ 1% Decrease in Tax Rate 2110 1477 317 160 51 2005 105 39 66 13 53 $ $ 69 $ $ 5% Increase in Sal 2215 1477 317 160 51 2005 105 39 210 42 168
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