Comsys is a start-up computer company. This quarter they expect Sales of $550000.They expect their Sales to

Fantastic news! We've Found the answer you've been seeking!

Question:

Comsys is a start-up computer company. This quarter they expect Sales of $550000.They expect their Sales to grow at a rate of 9% per quarter. Their Cost of Goods sold is running at 34% of Sales and is expected to stay at that rate. Their Selling Costs are 12% of Sales and are expected to stay at that rate. Their General and Administrative Costs (Including Research and Development) are $420000 this quarter and are scheduled to rise at 2% per quarter.

a) Design and implement a worksheet to make a 20 quarter income statement projection for Compsys. You should have a separate input area with well-labeled separate cells for each of the numbers above. You should have a separate row for each item in the income statement and a separate column for each quarter. The final row should be for Earnings Before Taxes. Use the Fill operation whenever possible.

In the first quarters, Comsys should show operating losses (negative Earnings Before Taxes). Under the assumptions stated above, what is the first quarter in which Comsys shows an operating profit (positive Earnings Before Taxes)?

b) Suppose Sales grow at 12% per quarter. Now is what quarter would Compsys first show an operating profit?

c) Suppose Sales grow at 9% per quarter and General and Administrative Costs grow at 6% per quarter and Selling Costs are 15% of sales. Now in what quarter will Compsys first show an operating profit?