Chapter 5, Problem 5.6BYP

(a)

To determine

Profit margin measures the amount of net income earned from each dollar of sales revenue generated by a company. Thus, it shows the relationship between the net income and net sales. It is calculated by using the following formula:

$\text{Profit Margin}=\frac{\text{Net}\text{income}}{\text{Net}\text{sales}}\times 100$

To Prepare: The income statements for 2015, as per S’s and J’s plans are adopted of Corporation M.

(b)

To determine

To Explain: The recommendations to Mrs. S, and Mr. J.

(c)

To determine

To Prepare: The condensed income statement of Corporation M for the year 2015 with the planned changes by Mrs. S, and Mr. J.

(d)

To determine

To Discuss: The impact that other factors might have.