A sportswear retaller reported net sales of $300,000 in year 1. Its cost of sales was $180,000 for the same year. For years 2 and 3, theretaller plans to increase net sales by 10 percent in year 2 and 15 percent in year 3. It also plans to negotiate a better contract with thesportswear manufacturer so that the cost of sportswear that is purchased and sold would Increase by a maximum of 8 percent in year2 and by 12 percent in year 3. (Do not round intermediate calculations. Round percentage answer to 1 decimal place (I.e., 0.124should be entered as 12.4).)Required:1. Compute the gross profit for year 1.Answer is complete and correct.$ 120,000Gross profit2. Compute the percentage changes in gross profit for years 2 and 3.Answer is complete but not entirely correct.Percent change13 %19.5%Year 2Year 3

Percentage Increase in sales is always on the immediately preceding year. So, if sales is expected…

sportswear retailer reported net sales of $300,000 in year 1. Its cost of sales was $180,000 for the same year. For years 2 and 3, the taller plans to increase net sales by 10 percent in year 2 and 15 percent In year 3. It also plans to negotiate a better contract with the portswear manufacturer so that the cost of sportswear that is purchased and sold would Increase by a maximum of 8 percent in year and by 12 percent in year 3. (Do not round intermediate calculations. Round percentage answer to 1 decimal place (1.e., 0.124 hould be entered as 12.4).) equired: Compute the gross profit for year 1. Answer is complete and correct. $ 120,000Ⓒ Gross profit Compute the percentage changes in gross profit for years 2 and 3. * Answer is complete but not entirely correct.

sportswear retailer reported net sales of $300,000 in year 1. Its cost of sales was $180,000 for the same year. For years 2 and 3, the taller plans to increase net sales by 10 percent in year 2 and 15 percent In year 3. It also plans to negotiate a better contract with the portswear manufacturer so that the cost of sportswear that is purchased and sold would Increase by a maximum of 8 percent in year and by 12 percent in year 3. (Do not round intermediate calculations. Round percentage answer to 1 decimal place (1.e., 0.124 hould be entered as 12.4).) equired: Compute the gross profit for year 1. Answer is complete and correct. $ 120,000Ⓒ Gross profit Compute the percentage changes in gross profit for years 2 and 3. * Answer is complete but not entirely correct.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

DSSS CorporationDSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $135,000. The cost of shipping and installation is an additional $2,600. The asset will fall into the 3-year MACRS class. The year 1- 4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $215,000 per year. Cost of goods sold will be 64% of sales. The project will require an increase in net working capital of $2,600. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 36% and DSSS Corporation’s appropriate discount rate is 12%. The fixed expenses is $12,000.Refer to DSSS Corporation. What is the operating cash flow for year 3? Group of answer choices $58,366 $49,192 $63,875 $20,379
Simmons Company is a merchandiser with multiple store locations. One of its store managers is considering a shift in her store's product mix in anticipation of a strengthening economy. Her store would invest $800,000 in more expensive merchandise (an increase in its working capital) with the expectation that it would increase annual sales and variable expenses by $400,000 and $250,000, respectively for three years. At the end of the three-year period, the store manager believes that the economic surge will subside; therefore, she will release the additional investment in working capital. The store manager's pay raises are largely determined by her store's return on investment (ROI), which has exceeded 22% each of the last three years. Click here to view Exhibit 148-1 and Exhibit 148-2 to determine the appropriate discount factor(s) using table. (Use appropriate factor(s) from the tables provided.) Required: 1. Assuming the company's discount rate is 16%, calculate the net present value…
Winnebagel Corp. currently sells 48,870 motor homes per year at $41,872 each, and 10,693 luxury motor coaches per year at $92,128 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 21,261 of these campers per year at $19,020 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 2,774 units per year, and reduce the sales of its motor coaches by 567 units per year. What is the amount to use as the annual sales figure when evaluating this project?
Healthy Foods Inc is considering introducing a new line of dried flowers. The firm expects to be able to generate $ 4 million in revenues from this new line, each year for the next 10 years. Customers who come to buy the flowers often buy the firm’s traditional offerings (fresh fruit and baked goods) and it is anticipated that the revenues on these goods will increase from $ 14 million to $ 17 million as a consequence. The firm has a 40% pre-tax operating margin on all of its products. Assuming a 8-year life, a 10% cost of capital, a 40% tax rate and no salvage value or depreciation, what is the maximum that you would be willing to invest in this new product line?
DSSS CorporationDSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $135,000. The cost of shipping and installation is an additional $2,600. The asset will fall into the 3-year MACRS class. The year 1- 4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $215,000 per year. Cost of goods sold will be 64% of sales. The project will require an increase in net working capital of $2,600. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $30,000. The marginal tax rate is 36% and DSSS Corporation’s appropriate discount rate is 12%. The fixed expenses is $12,000.Refer to DSSS Corporation. What is the book value of the machine at the end of year 4? Group of answer choices $20,379 $45,862 $10,196 $61,163
A plastic manufacturing company that makes four major products seeks to expand its operations in the coming year. At the beginning of the financial year, the company must decide on which of four new machines A, B, or C to purchase to be able to meet total annual demand. Each machine operates 14 hours a day, 360 days a year. Machine A costs GH¢43,000, machine B costs GH¢37,500 and machine C costs GH¢75,000. The following product forecasts and processing times have been projected: Demand, units/year Processing times per Unit (Minutes) Product Machine A Machine B Machine CPenholders 16,000 5 3 6Bowls 14,000 4 3 5Cups 6,000 6 5 7Carrier Bags 24,000 3…
Roche Brothers is considering a capacity expansion of its supermarket. The landowner will build the addition to suit in return for $225,000 upon completion and a five-year lease. The increase in rent for the addition is $10,000 per month. The annual sales projected through year 5 follow. The current effective capacity is equivalent to 500,000 customers per year. Assume a 2 percent pretax profit on sales. Click the icon to view the annual sales projections. a. If Roche expands its capacity to serve 700,000 customers per year now (end of year 0), what are the projected annuall incremental pretax cash flows attributable to this expansion? The projected annual incremental pretax cash flows attributable to this expansion in year 0 are $-225,000 (Enter your response as an integer.) The projected annual incremental pretax cash flows attributable to this expansion in year 1 are $. (Enter your response as an integer.) kamp Data Table Customers Average Sales per Customer Print 560,000 600,000…
Simmons Company is a merchandiser with multiple store locations. One of its store managers is considering a shift in her store's product mix in anticipation of a strengthening economy. Her store would invest $800,000 in more expensive merchandise (an increase in its working capital) with the expectation that it would increase annual sales and variable expenses by $400,000 and $250,000, respectively for three years. At the end of the three-year period, the store manager believes that the economic surge will subside; therefore, she will release the additional investment in working capital. The store manager's pay raises are largely determined by her store's return on investment (ROI), which has exceeded 22% each of the last three years. Click here to view Exhibit 7B-1 to determine the appropriate discount factor(s) using table. Required: 1. Assuming the company's discount rate is 16%, calculate the net present value of the store manager's investment opportunity. 2. Calculate the annual…
Reliant Chairs sells designer seating to consumers through retail outlets. Total industry sales for the market last year were $128 million, with Reliant’s sales representing 6.5% of that total. Contribution margin is 18%. Reliant’s sales force calls on retail outlets and each sales rep earns $45,500 per year, plus 2.5% commission on all sales. Retailers receive a 38% margin on selling price and generate average revenue of $12,000 per outlet for Reliant. The marketing manager has suggested increasing customer advertising by $200,000. By how much would dollar sales need to increase to break even on this expenditure? What increase in overall market share does this represent? Another suggestion is to hire 3 more sales representatives to gain new consumer retail accounts. How many new retail outlets would be necessary to break even on the increased cost of adding the 3 sales reps? A final suggestion is to make a 10% price reduction across the board. By how much would dollar sales need to…
Allegience Insurance Company's management is considering an advertising program that would require an initial expenditure of $196,945 and bring in additional sales over the next five years. The projected additional sales revenue in year 1 is $94,000, with associated expenses of $34,500. The additional sales revenue and expenses from the advertising program are projected to increase by 10 percent each year. Allegience's tax rate is 30 percent. (Hint: The $196,945 advertising cost is an expense.) Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the payback period for the advertising program. 2. Calculate the advertising program's net present value, assuming an after-tax hurdle rate of 10 percent. (Round your intermediate calculations and final answer to the nearest whole dollar.) 1. Payback period 2. Net present value years
DSSS CorporationDSSS Corporation is considering a new project to manufacture widgets. The cost of the manufacturing equipment is $135,000. The cost of shipping and installation is an additional $5,300. The asset will fall into the 3-year MACRS class. The year 1- 4 MACRS percentages are 33.33%, 44.45%, 14.81%, and 7.41%, respectively. Sales are expected to be $230,000 per year. Cost of goods sold will be 61% of sales. The project will require an increase in net working capital of $5,300. At the end of three years, DSSS plans on ending the project and selling the manufacturing equipment for $20,000. The marginal tax rate is 39% and DSSS Corporation’s appropriate discount rate is 15%. The fixed expenses is $12,000.Refer to DSSS Corporation. What is the operating cash flow for year 2? Group of answer choices $62,363 $65,634 $55,501 $71,719
Emmons Lawn Maintenance (ELM) provides lawn and garden care for residential properties. In the current year, ELM maintains 75 properties and earns an average of $5,000 annually for each property. The owner of ELM is planning for the coming year. New building in the area is expected to increase volume by 20 percent. In addition, the owner estimates that the number of homeowners that will want ELM's service will increase by 10 percent. ELM plans to increase the price of service by 12.5 percent to cover expected increased wage and equipment costs. Estimate revenues for Emmons Lawn Maintenance for the coming year.