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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.

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.

Managerial Accounting: The Cornerstone of Business Decision-Making
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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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. Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income $2,110 $ 1,245 401 121 108 $1,875 $ 235 34 $201 $ 40 $161 $ Combined |||| 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.
Transcribed Image Text: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. Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Base Case Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income $2,110 $ 1,245 401 121 108 $1,875 $ 235 34 $201 $ 40 $161 $ Combined |||| 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.
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