Question

NB: Please go ahead and deduct the amount of questions answered out of the 20 questions that i am alloted for this month. I presently have 20 questions. Or advise me if i have to send them in single format.

______________________________________________________________

6. In 2013, SuperWidget, Inc., sold 100,000 widgets for $50 each. The cost of goods sold was $20 each. The company had $150,000 in marketing expenses, $50,000 in sales, and $20,000 in G&A. Also, the company has interest expense, as it is paying 10% interest on a $2 million loan due to the bank. The company pays a 30% tax rate. [15 points]

(a) What is the gross profit?

(b) What is the gross profit margin?

(c) What is the operating profit?

(d) What is the pre-tax income?

(e) What is the net income?

Answer 1

Sales (100000*50)			5,000,000
Less: COGS (100000*20)			2,000,000
Gross Profit			3,000,000
Less: Operating expense
Sales expense			50,000
Marketing expense			150,000
G &A expense			20,000
Operating income			2,780,000
Less: Interest expense			200,000
(2000,000*10%)
Pre-tax income			2,580,000
Less: Tax @ 30%			774000
income after tax			1,806,000
Req a:
Gross profit: 3000,000
Req b:
Gross Profit margin: Gross profit/ Sales *100
		3000,000 /5000,000 *100 = 60%
Req c:
Operating profits: 2780,000
Req d:
Pre-tax income: 2580,000
Req e:
Net income: $ 1806000