Local Co. has sales of $10.4 million and cost of sales of $6.2 million. Its selling,...

 

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Local Co. has sales of $10.4 million and cost of sales of $6.2 million. Its selling, general and administrative expenses are $550,000 and its research and development is $1.3 million. It has annual depreciation charges of $1.2 million and a tax rate of 35%. Local's gross margin is 40.38%, its operating margin is 11.06%, and its net profit margin is 7.19%. If Local Co. had an increase in selling expenses of $400,000, how would that affect each of its margins? Local's new gross margin is%, new operating margin is%, and new net profit margin is%. (Round to two decimal places.) Local Co. has sales of $10.4 million and cost of sales of $6.2 million. Its selling, general and administrative expenses are $550,000 and its research and development is $1.3 million. It has annual depreciation charges of $1.2 million and a tax rate of 35%. Local's gross margin is 40.38%, its operating margin is 11.06%, and its net profit margin is 7.19%. If Local Co. had an increase in selling expenses of $400,000, how would that affect each of its margins? Local's new gross margin is%, new operating margin is%, and new net profit margin is%. (Round to two decimal places.)

Answer rating: 100% (QA)

To calculate the effect of the increase in selling expenses on Local Cos margins we first need to re... View the full answer