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Chapter 2: 12BP_a (page 147)
Healthy Foods Inc. sells 50-pound bags of grapes to the military for \(10 a bag. The fixed costs of this operation are \)80,000, while the variable costs of grapes are $0.10 per pound.
a. What is the break-even point in bags?
The Break-even point in bags is 16,000 units.
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A-Rod Fishing Supplies had sales of \(2,500,000 and cost of goods sold of \)1,710,000. Selling and administrative expenses represented 10 percent of sales. Depreciation was 6 percent of the total assets of $4,680,000. What was the firm鈥檚 operating profit?
Given the following information, prepare an income statement for the Dental Drilling Company.
Selling and administrative expenses | $112,000 |
Depreciation expenses | 73,000 |
Sales | 489,000 |
Interest expenses | 45,000 |
Cost of goods sold | 156,000 |
Taxes | 47,000 |
Inflation can have significant effects on income statements and balance sheets, and therefore on the calculation of ratios. Discuss the possible impact of inflation on the following ratios, and explain the direction of the impact based on your assumptions. (LO3-5)
c. Fixed asset turnover
Sosa Diet Supplements had earnings after taxes of $800,000 in 20X1 with 200,000 shares of stock outstanding. On January 1, 20X2, the firm issued 50,000 new shares. Because of the proceeds from these new shares and other operating improvements, earnings after taxes increased by 30 percent.
a. Compute earnings per share for the year 20X1.
b. Compute earnings per share for the year 20X2.
Arrange the following income statement items so they are in the proper order of an income statement:
Taxes | Earning per share |
Share Outstanding | Earning before taxes |
Interest Expense | Cost of goods sold |
Depreciation Expense | Earning after taxes |
Preferred Stcok dividends | Earning available to common stockholders |
Sales | Selling and administrative expense |
Gross profit |
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