Question: Dr Zhiv go Diagnostics Corp income statements for 2013 are as

Dr. Zhivàgo Diagnostics Corp. income statements for 2013 are as follows:
Sales $2,790,000
Cost of goods sold 1,790,000
Gross profit 1,000,000
Selling and administrative expense 302,000
Operating profit 698,000
Interest expense 54,800
Income before taxes 643,200
Taxes (30%) 192,960
Income after taxes $ 450,240
a. Compute the profit margin for 2013.
b. Assume in 2014, sales increase by 10 percent and cost of goods sold increases by 20 percent. The firm is able to keep all other expenses the same. Once again, assume a tax rate of 30 percent on income before taxes. What is income after taxes and the profit margin for 2014?

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  • CreatedOctober 14, 2014
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