During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: a. Contribution margin and gross margin will be lower. b. Contribution margin will be higher, while its gross margin will remain the same. c. Operating income will be the same under both the financial accounting income statement and contribution income statement. d. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement.

During the current year, XYZ Company increased its variable SG&A expenses while keeping fixed SG&A expenses the same. As a result, XYZ’s: a. Contribution margin and gross margin will be lower. b. Contribution margin will be higher, while its gross margin will remain the same. c. Operating income will be the same under both the financial accounting income statement and contribution income statement. d. Inventory amounts booked under the financial accounting income statement will be lower than under the contribution income statement.

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 1MCQ

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3-17 During the current year, XYZ Company increased its variable SG&A expenses while keeping fixedSG&A expenses the same. As a result, XYZ’s:a. Contribution margin and gross margin will be lower.b. Contribution margin will be higher, while its gross margin will remain the same.c. Operating income will be the same under both the financial accounting income statement and contributionincome statement.d. Inventory amounts booked under the financial accounting income statement will be lower than underthe contribution income statement.
Compute the following for year 2: 2-a. Percentage markup on sales. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4) 2-b. Income tax rate. (Round percentage answer to 1 decimal place (i.e., 0.124 should be entered as 12.4).) 2-c. Net profit margin ratio. Was it a good or poor indicator of performance? (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) 2-d. Percentage of total resources invested in property, plant, and equipment. (Round percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) 2-e. Debt-to-equity ratio. Interpret the result. (Round the final answer to 2 decimal places.) 2-f. Return on assets. Assume that long-term debt increased to $36,810 in month 1 of year 2. (Round intermediate calculations to 3 decimal places and percentage answer to 2 decimal places (i.e., 0.1243 should be entered as 12.43).) 2-g. Return on equity. (Round percentage answer to 2 decimal places (i.e.,…
Find in Amount ($) and Percentage(%) for Year 2 over Year 1: Income Statement - (a) Sales Revenue (b) Cost of sales (c) Gross Margin
Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the TaxRate, and a 5 percent increase in Sales. Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income Base Case $ 2,110 1,477 317 160 51 2,005 105 39 13 1% Increase in Gross Margin $ $ $66 $ Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) $53 $ 2110 1491 317 160 51 2019 91 39 52 10 42 $ $ $ $ 1% Decrease in Tax Rate 2110 1477 317 160 51 2005 105 39 66 13 53 $ $ 69 $ $ 5% Increase in Sal 2215 1477 317 160 51 2005 105 39 210 42 168
For the base case in this section, as a percentage of sales, COGS = 69 percent, SGA = 15 percent, R&D = 2.5 percent. Depreciation, Interest expense are fixed as stated. Tax Rate is 21 percent.
A condensed income statement for Weber Associates and a partially completed vertical analysis follow. Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). 2. Does Cost of Goods Sold, as a percentage of Net Revenues, represent better or worse performance in 2019 as compared to 2018? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete the vertical analysis by computing each missing line item as a percentage of net revenues. TIP: In the prior year, Cost of Goods Sold was 31 percent of Net Revenues, computed as ($1,397 ÷ $4,571). (Decreases should be indicated by a minus sign. Round your answers to the nearest whole percent.) Net Revenues Cost of Goods Sold Research and Development Expense Sales and Marketing Expense General and Administrative Expense Income from Operations Other…
Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the TaxRate, and a 5 percent increase in Sales. Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income Base Case $ 2,110 1,456 317 160 53 1,986 124 39 18 1% Increase in Gross Margin $ $85 $ Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) $67 $ 2131.10 $ 1470.46 319.67 160 53.28 2003.40 128 39 89 18.63 70.07 $ $ LA $ LA 1% Decrease in Tax Rate 2110 $ 1456 317 160 53 1986 124 39 85 17 68 $ LA $ LA $ VA 5% Increase in Sale! 2215.50 1528.70 332.33 160 55.39 2076.41 139.09 39 100.09 21.02 79.07 For the base case in this section, as a percentage of sales, COGS = 69 percent, SGA = 15 percent, R&D = 2.5 percent. Depreciation, Interest expense are fixed as stated.…
PROBLEM 11-17 Return on Investment (ROI) and Residual Income LO11-1, LO11-2 Financial data for Joel de Paris, Inc., for last year follow: Joel de Paris, Inc. Balance Sheet Beginning Ending Balance Balance Assets Cash $ 140,000 $ 120,000 Accounts receivable 450,000 530,000 Inventory 320,000 380,000 Plant and equipment, net 680,000 620,000 Investment in Buisson, S.A. 280,000 170,000 250,000 Land (undeveloped) 180,000 Total assets $2,020,000 $2,100,000 Liabilities and Stockholders' Equity Accounts payable. $ 360,000 $ 310,000 Long-term debt Stockholders' equity 1,500,000 1,500,000 160,000 290,000 Total liabilities and stockholders' equity $2,020,000 $2,100,000 Joel de Paris, Inc. Income Statement Sales $4,050,000 Operating expenses Net operating income 3,645,000 405,000 Interest and taxes: Interest expense $150,000 Таx expense 110,000 260,000 Net income $ 145,000 The company paid dividends of $15,000 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an…
Case 1: Vertical Analysis of Profit and LossPrepare a vertical analysis of the income statements of GMA from 2007 to 2010 by usingRevenues as the base.1. Describe the trend of revenues from 2007 to 2010. What observations can be drawn?2. Describe the trend of direct costs from 2007 to 2010. What observations can be drawn?3. Describe the trend of operating expenses from 2007 to 2010. What observations can be drawn?4. Describe the trend of operating income from 2007 to 2010. What observations can be drawn?5. Describe the trend of net income from 2007 to 2010. What observations can be drawn?
ABC Company reported the following data for the current year: 1. How much is the gross profit? 2. How much is the administrative expense? 3. How much is the selling expense? 4. How much is the net income?
If accounts receivable increase by R500, inventory increases by R200 and accounts payable increase by R400, net working capital would ... Select one: decrease by R300. a. b. increase by R700. C. increase by R300. Od. remain unchanged. Clear my choice
An analysis of the income statement of MERDEKA Corporation showed the following data on December 31, 2019 (all amounts in pesos): Sales Selling price per piece Variable costs and expenses Fixed costs and expenses 4,850,000 -25 -2,667,500 - 1,212,500 Using the above accounting information, solve for the answers to the following questions: How much is the contribution margin? How much is the net profit? How much is the breakeven sales? How much is number of units sold at break-even? How much is sales at target profit of 150% of current profit?|