subject
Business, 14.03.2020 03:59 carri9789

For 2016, Indigo Company initiated a sales promotion campaign that included the expenditure of an additional $39,000 for advertising. At the end of the year, Lumi Neer, the president, is presented with the following condensed comparative income statement:

Indigo Company Comparative

Income Statement For the Years Ended December 31, 2016 and 2015

1 2016 2015

2 Sales $810,000.00 $500,000.00

3 Cost of goods sold 283,500.00 185,000.00

4 Gross profit $526,500.00 $315,000.00

5 Selling expenses $162,000.00 $90,000.00

6 Administrative expenses 56,700.00 45,000.00

7 Total operating expenses $218,700.00 $135,000.00

8 Income from operations $307,800.00 $180,000.00

9 Other income 72,900.00 45,000.00

10 Income before income tax $380,700.00 $225,000.00

11 Income tax expense 210,600.00 130,000.00

12 Net income $170,100.00 $95,000.00

Required:

1. Prepare a comparative income statement for the two-year period, presenting an analysis of each item in relationship to sales for each of the years. Round your percentages to one decimal place. Enter all amounts as positive numbers.

2. To the extent the data permit, comment on the significant relationships revealed by the vertical analysis prepared in (1).

1. Prepare an income statement in comparative form, stating each item for both years as a percent of sales. Round your percentages to one decimal place. Enter all amounts as positive numbers.

Indigo Company

Comparative Income Statement

For the Years Ended December 31, 2016 and 2015

1

2016

2016

2015

2015

2

Amount

Percent

Amount

Percent

3

Sales

$810,000.00

$500,000.00

4

Cost of goods sold

283,500.00

185,000.00

5

Gross profit

$526,500.00

$315,000.00

6

Selling expenses

$162,000.00

$90,000.00

7

Administrative expenses

56,700.00

45,000.00

8

Total operating expenses

$218,700.00

$135,000.00

9

Income from operations

$307,800.00

$180,000.00

10

Other income

72,900.00

45,000.00

11

Income before income tax

$380,700.00

$225,000.00

12

Income tax expense

210,600.00

130,000.00

13

Net income

$170,100.00

$95,000.00

Solution

Indigo Company

Comparative Income Statement

For the Years Ended December 31, 2016 and 2015

1

2016

2016

2015

2015

2

Amount

Percent

Amount

Percent

3

Sales

$810,000.00

$500,000.00

4

Cost of goods sold

283,500.00

185,000.00

5

Gross profit

$526,500.00

$315,000.00

6

Selling expenses

$162,000.00

$90,000.00

7

Administrative expenses

56,700.00

45,000.00

8

Total operating expenses

$218,700.00

$135,000.00

9

Income from operations

$307,800.00

$180,000.00

10

Other income

72,900.00

45,000.00

11

Income before income tax

$380,700.00

$225,000.00

12

Income tax expense

210,600.00

130,000.00

13

Net income

$170,100.00

$95,000.00

ansver
Answers: 1

Other questions on the subject: Business

image
Business, 22.06.2019 02:00, bannedccnt
Ida sidha karya company is a family-owned company located on the island of bali in indonesia. the company produces a handcrafted balinese musical instrument called a gamelan that is similar to a xylophone. the gamelans are sold for $860. selected data for the company’s operations last year follow: units in beginning inventory 0 units produced 320 units sold 285 units in ending inventory 35 variable costs per unit: direct materials $ 135 direct labor $ 355 variable manufacturing overhead $ 30 variable selling and administrative $ 15 fixed costs: fixed manufacturing overhead $ 64,000 fixed selling and administrative $ 27,000 the absorption costing income statement prepared by the company’s accountant for last year appears below: sales $ 245,100 cost of goods sold 205,200 gross margin 39,900 selling and administrative expense 31,275 net operating income $ 8,625 required: 1. under absorption costing, how much fixed manufacturing overhead cost is included in the company's inventory at the end of last year? 2. prepare an income statement for last year using variable costing. what is the amount of the difference in net operating income between the two costing methods?
Answers: 1
image
Business, 22.06.2019 14:00, gcristhian8863
Which of the following would be an accurate statement about achieving a balanced budget
Answers: 1
image
Business, 22.06.2019 18:00, SmolBeanPotato
What is the cause of smoky exhaust?
Answers: 1
image
Business, 22.06.2019 18:30, miller5452
Amanufacturer has paid an engineering firm $200,000 to design a new plant, and it will cost another $2 million to build the plant. in the meantime, however, the manufacturer has learned of a foreign company that offers to build an equivalent plant for $2,100,000. what should the manufacturer do?
Answers: 1
You know the right answer?
For 2016, Indigo Company initiated a sales promotion campaign that included the expenditure of an ad...

Questions in other subjects:

Konu
Mathematics, 07.11.2020 01:00
Konu
Mathematics, 07.11.2020 01:00
Konu
History, 07.11.2020 01:00