Below are the Income Statement of ABC Company for two consecutive years.ABC CompanyYear 1P 5,000, 000Year 2P 6, 500, 000950, 000600, 000Net SalesCost of Goods Soldxs3Gross Profit880, 000550, 000Less: Administrative ExpenseSelling and Operating 20,000ExpenseIncome before taxesIncome Tax ExpenseIncome After Taxes95,000105, 00040, 0004,805, 0003, 455, 000691, 000P 2, 764, 000961, 000P 3,844, 000Find the following:a, Express the ratio of the Gross Profit of Year 1 to the Cost of Goods Sold of Ycar 2 in Fraction.b. What fraction can you arrive at if you compare the Administrative Expenses of Year 1 to itsYear 2?c. What would be the difference if you subtract your answer from letter a to your answer fromletter b?d. What fraction can you arrive if you will compare the Selling and Operating taxes of Year 2 tothe Net Sales of Year 1?e. Express the ratio of Year 1 Selling and Operating Expense to the Administrative Expense of thesame year in fraction form.f. What would be the product of the answers for letters d and e?RV

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ss the ratio c fraction car SS would be th

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 38E: Sundahl Companys income statements for the past 2 years are as follows: Refer to the information for...

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Below are the Income Statement of ABC Company for two consecutive years.
ABC Company
Year 1
P 5,000, 000
Year 2
P 6, 500, 000
950, 000
600, 000
Net Sales
Cost of Goods Soldxs3
Gross Profit
880, 000
550, 000
Less: Administrative Expense
Selling and Operating 20,000
Expense
Income before taxes
Income Tax Expense
Income After Taxes
95,000
105, 000
40, 000
4,805, 000
3, 455, 000
691, 000
P 2, 764, 000
961, 000
P 3,844, 000
Find the following:
a, Express the ratio of the Gross Profit of Year 1 to the Cost of Goods Sold of Ycar 2 in Fraction.
b. What fraction can you arrive at if you compare the Administrative Expenses of Year 1 to its
Year 2?
c. What would be the difference if you subtract your answer from letter a to your answer from
letter b?
d. What fraction can you arrive if you will compare the Selling and Operating taxes of Year 2 to
the Net Sales of Year 1?
e. Express the ratio of Year 1 Selling and Operating Expense to the Administrative Expense of the
same year in fraction form.
f. What would be the product of the answers for letters d and e?
RV

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