Fatima Company is engaged in the business of women's clothing, sold only in the US at...

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Fatima Company is engaged in the business of women's clothing, sold only in the US at the present time. The income statement of Fatima Co. for the 2022 year is presented below. For 2023, the company is expecting a growth in revenues as well as in net income. This expansion will only be be possible, however, if if the following assumptions are correct. 1. Increase the sales of women's clothing in the US by 15%. 2. Add men's clothing for the first time in its product line; total of 5,000 men's suits will be sold in 2023 at an average price of $375 per unit. These coats will be purchased from a South African company at a price of $185 per unit and sold to only online customers. 3. The cost of goods sold for the existing (US) product line consists of 80% variable and 20% fixed. (Note that the fixed amount will remnain unchanged, while the variable postion will increase in direct proportion to the increase in sales. The cost of goods sold for the online business will be all variable. The operating expenses for the existing line of business are 45% fixed and 55% variable. Obviulsy, the dollar amount of the fixed costs and expenses will remain unchanged while the variable expenses will change in proportion to changes in sales. 4. The operating expenses for the online market will be 17% variable (as a percent of online sales of men's suits): In addition, there will be fixed opearting expenses for the online business in the amount of $65,000/ per year. REQUIREMENTS: A. Calculate the net projected income for 2023, assuming the tax rate is to 21%. 5 (The individual segments of the compnay do not pay the taxes: taxes are paid by the compnay as a whole). B. Calculate the GP % for 2022 and 2023 for the compnay 3 C. Calculate the profit margin for 2022 and 2023 and the percentage change in the net income. 3 D. Calculate the Break-even points in dollars for 2022 E. Calculate the Degree of Operating leverage for 20212. 5 2 18 Units 2022 Sales (Only US) 38,200 $955,000 Cost of Sales 592,100 Gross Profit 362,900 Operating Expenses 130,000 Operating Income 232,900 Income Tax (20%) 46,580 Net Income 186,320 Fatima Company Income Statements For the Year Ended 2022(Actual) and 2023 (Projected) 2022 (Actual) 2023(Projected) Womens US-Womens Men's-online Total Sales (Only US) 955,000 100.00% Cost of Sales 592,100 62.00% F 118,420 12.40% V 473,680 49.60% Gross Profit 362,900 38.00% Operating Expenses 130,000 13.61% F 58,500 6.13% V 71,500 7.49% Operating Income 232,900 24.39% Income Tax (20% now; 21% in 2023) 46,580 4.88% Net Income 186,320 19.51% (Profit margin) Profit Margin 19.51% Percent Change from 202) Calculations Requireents: Fatima Company is engaged in the business of women's clothing, sold only in the US at the present time. The income statement of Fatima Co. for the 2022 year is presented below. For 2023, the company is expecting a growth in revenues as well as in net income. This expansion will only be be possible, however, if if the following assumptions are correct. 1. Increase the sales of women's clothing in the US by 15%. 2. Add men's clothing for the first time in its product line; total of 5,000 men's suits will be sold in 2023 at an average price of $375 per unit. These coats will be purchased from a South African company at a price of $185 per unit and sold to only online customers. 3. The cost of goods sold for the existing (US) product line consists of 80% variable and 20% fixed. (Note that the fixed amount will remnain unchanged, while the variable postion will increase in direct proportion to the increase in sales. The cost of goods sold for the online business will be all variable. The operating expenses for the existing line of business are 45% fixed and 55% variable. Obviulsy, the dollar amount of the fixed costs and expenses will remain unchanged while the variable expenses will change in proportion to changes in sales. 4. The operating expenses for the online market will be 17% variable (as a percent of online sales of men's suits): In addition, there will be fixed opearting expenses for the online business in the amount of $65,000/ per year. REQUIREMENTS: A. Calculate the net projected income for 2023, assuming the tax rate is to 21%. 5 (The individual segments of the compnay do not pay the taxes: taxes are paid by the compnay as a whole). B. Calculate the GP % for 2022 and 2023 for the compnay 3 C. Calculate the profit margin for 2022 and 2023 and the percentage change in the net income. 3 D. Calculate the Break-even points in dollars for 2022 E. Calculate the Degree of Operating leverage for 20212. 5 2 18 Units 2022 Sales (Only US) 38,200 $955,000 Cost of Sales 592,100 Gross Profit 362,900 Operating Expenses 130,000 Operating Income 232,900 Income Tax (20%) 46,580 Net Income 186,320 Fatima Company Income Statements For the Year Ended 2022(Actual) and 2023 (Projected) 2022 (Actual) 2023(Projected) Womens US-Womens Men's-online Total Sales (Only US) 955,000 100.00% Cost of Sales 592,100 62.00% F 118,420 12.40% V 473,680 49.60% Gross Profit 362,900 38.00% Operating Expenses 130,000 13.61% F 58,500 6.13% V 71,500 7.49% Operating Income 232,900 24.39% Income Tax (20% now; 21% in 2023) 46,580 4.88% Net Income 186,320 19.51% (Profit margin) Profit Margin 19.51% Percent Change from 202) Calculations Requireents: