Question: For the base case in this section, as a percentage of sales, COGS equal 71%. SGA equals 16%, RFor the base case in this section,

For the base case in this section, as a percentage of sales, COGS equal 71%. SGA equals 16%, RFor the base case in this section, as a percentage of sales, COGS equal 71%. SGA equals 16%, R&D equals 2.4%. Depreciation interest expenses are fixed as stated. Tax rate is 20%.

1% increase in gross margin 1% decrease in tax rate 5% increase in sales
Sales 2110
Cogs 1498
Selling, general and admin exp 338
Depreciation 160
Research and development 51
Total cost and expences 2047
Operating income 63
Interest expense 39
Earnings before income taxes 24
Provision for income taxes 5
Net income 19

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