ompute the gross profit percentage for each year. Assuming that the change from 2014 to 2015 is the beginning of a sustained trend, is Insignia likely to earn more or less gross profit from each dollar of sales in 2016? Compute the net profit margin for each year.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The average price of a gallon of gas in 2015 dropped $0.94 (28 percent) from $3.34 in 2014 (to $2.40 in 2015). Let’s see whether these changes are reflected in the income statement of Insignia Corporation for the year ended December 31, 2015 (amounts in billions).

  1. Compute the gross profit percentage for each year. Assuming that the change from 2014 to 2015 is the beginning of a sustained trend, is Insignia likely to earn more or less gross profit from each dollar of sales in 2016?
  2. Compute the net profit margin for each year. Given your calculations here and in requirement 1, explain whether Insignia did a better or worse job of controlling expenses other than the costs of crude oil and products in 2015 relative to 2014.
2015
2014
$245
125
61
$258
131
Revenues
Cost of Purchased Crude Oil and Products
55
Other Operating Costs
Income before Income Tax Expense
Income Tax Expense
72
59
28
35
Net Income
$ 31
$ 37
Transcribed Image Text:2015 2014 $245 125 61 $258 131 Revenues Cost of Purchased Crude Oil and Products 55 Other Operating Costs Income before Income Tax Expense Income Tax Expense 72 59 28 35 Net Income $ 31 $ 37
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