Using the base case, calculate the composite effects of a 5 percent increase in Sales, a 2 percent decrease in Gross Margin, and a 5 percent increase is SG&A as percent of Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case Combined Sales $2,110 2215.50 Cost of goods sold 1,245 1351.46 Selling, general, and 401 531.72 administrative expense Depreciation 121 121 Research and development 108 112.99 Total costs and expenses $ 1,875 $ 1996.17 Operating Income 235 219.33 Interest expense 34 34 Earnings before Income Taxes $201 $ 185.33 Provision for Income Taxes 40 Net Income 37.07 $161 $ 148.26 For the base case in this question, as a percentage of sales, COGS=59 percent, SGA = 19 percent, R&D = 5.1 percent. Depreciation, Interest expense are fixed as stated. Tax Rate is 20 percent.

Using the base case, calculate the composite effects of a 5 percent increase in Sales, a 2 percent decrease in Gross Margin, and a 5 percent increase is SG&A as percent of Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case Combined Sales $2,110 2215.50 Cost of goods sold 1,245 1351.46 Selling, general, and 401 531.72 administrative expense Depreciation 121 121 Research and development 108 112.99 Total costs and expenses $ 1,875 $ 1996.17 Operating Income 235 219.33 Interest expense 34 34 Earnings before Income Taxes $201 $ 185.33 Provision for Income Taxes 40 Net Income 37.07 $161 $ 148.26 For the base case in this question, as a percentage of sales, COGS=59 percent, SGA = 19 percent, R&D = 5.1 percent. Depreciation, Interest expense are fixed as stated. Tax Rate is 20 percent.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 4RE: Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020....

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