Question

Mercedes, Co. has the following quarterly financial
information.

4^{th} Quarter |
3^{rd} Quarter |
2^{nd} Quarter |
1^{st} Quarter |
|||||||||

Sales revenue | $ | 947,800 | $ | 957,300 | $ | 955,600 | $ | 963,400 | ||||

Cost of goods sold | 306,800 | 319,400 | 319,000 | 324,200 | ||||||||

Operating expenses | 250,000 | 261,400 | 259,600 | 263,700 | ||||||||

Interest expense | 4,750 | 4,750 | 4,750 | 4,650 | ||||||||

Income tax expense | 86,600 | 89,500 | 89,500 | 92,000 | ||||||||

Average number of common shares outstanding | 804,530 | 799,564 | 801,170 | 814,500 | ||||||||

Stock price when Q4 EPS released | $ | 24 | ||||||||||

**a.** Calculate the gross profit percentage for each
quarter. **(Enter your percentage answer to 2 decimal places
(i.e., enter 0.1234 as 12.34.))**

**b.** Calculate the net profit margin for each
quarter. **(Enter your percentage answer to 2 decimal places
(i.e., enter 0.1234 as 12.34.))**

**c.** Calculate the EPS for each quarter. **(Do
not round your intermediate calculations and round your final
answer to 2 decimal places.)**

**d.** Calculate the Price/Earnings ratio at the end
of the year. **(Do not round your intermediate calculations
and round your final answer to 2 decimal
places.)**

Answer #1

Dana’s Ribbon World makes award rosettes. Following is
information about the company:
Variable cost per rosette
$
1.20
Sales price per rosette
3.00
Total fixed costs per month
3600.00
Required:
1. Suppose Dana’s would like to generate a profit of $860.
Determine how many rosettes it must sell to achieve this target
profit. (Round your intermediate calculations to 2 decimal
places and final answer to the
nearest whole number.)
2. If Dana’s sells 2,450 rosettes, compute its
margin of safety...

Solano Company has sales of $740,000, cost of goods sold of
$490,000, other operating expenses of $46,000, average invested
assets of $2,200,000, and a hurdle rate of 10 percent.
Required:
1. Determine Solano’s return on investment (ROI),
investment turnover, profit margin, and residual income.
(Do not round your intermediate calculations. Enter your
ROI and Profit Margin percentage answer to the nearest 2 decimal
places, (i.e., 0.1234 should be entered as 12.34%). Round your
Investment Turnover answer to 4 decimal places.)...

Compute the return on asset ratio for Year 2 given the following
data: (Enter your answer as a percentage rounded to 2 decimal
places (i.e. 0.1234 should be entered as 12.34).) Total asset
turnover year 2: 2.10 Year 1: 1.90 Net profit margin Year 2: 12.00
% Year 1: 10.00 %

Hickory Company manufactures two products—13,000 units of
Product Y and 5,000 units of Product Z. The company uses a
plantwide overhead rate based on direct labor-hours. It is
considering implementing an activity-based costing (ABC) system
that allocates all of its manufacturing overhead to four cost
pools. The following additional information is available for the
company as a whole and for Products Y and Z:
Activity Cost Pool Activity Measure
Estimated Overhead Cost Expected Activity
Machining Machine-hours $
242,400 12,000 MHs...

The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
6,500
Accounts receivable, net
35,000
Merchandise inventory
70,000
Prepaid expenses
3,500
Total current
assets
115,000
Property and
equipment, net
185,000
Total assets
$
300,000
Liabilities
and Stockholders' Equity
Liabilities:
Current liabilities
$
50,000
Bonds payable, 10%
80,000
Total
liabilities
130,000
Stockholders’
equity:
Common stock, $5 par value
$
30,000
Retained earnings
140,000
Total stockholders’
equity
170,000
Total liabilities...

The financial statements for Castile Products, Inc., are given
below: Castile Products, Inc. Balance Sheet December 31 Assets
Current assets: Cash $ 24,000 Accounts receivable, net 250,000
Merchandise inventory 330,000 Prepaid expenses 9,000 Total current
assets 613,000 Property and equipment, net 880,000 Total assets $
1,493,000 Liabilities and Stockholders' Equity Liabilities: Current
liabilities $ 280,000 Bonds payable, 11% 390,000 Total liabilities
670,000 Stockholders’ equity: Common stock, $5 per value $ 140,000
Retained earnings 683,000 Total stockholders’ equity 823,000 Total
liabilities...

The financial statements for Castile Products, Inc., are given
below:
Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash
$
21,000
Accounts receivable, net
260,000
Merchandise inventory
350,000
Prepaid expenses
10,000
Total current assets
641,000
Property and equipment, net
880,000
Total assets
$
1,521,000
Liabilities and Stockholders'
Equity
Liabilities:
Current liabilities
$
200,000
Bonds payable, 8%
380,000
Total liabilities
580,000
Stockholders’ equity:
Common stock, $10 per value
$
120,000
Retained earnings
821,000
Total stockholders’ equity
941,000
Total liabilities...

Wescott Company has three divisions: A, B, and C. The company
has a hurdle rate of 8 percent. Selected operating data for the
three divisions are as follows:
Division A
Division B
Division C
Sales revenue
$
1,260,000
$
939,000
$
920,000
Cost of goods sold
779,000
689,000
668,000
Miscellaneous operating
expenses
65,000
53,000
54,000
Interest and taxes
49,000
42,000
42,000
Average invested assets
8,473,000
1,977,000
3,254,000
Wescott is considering an expansion project in the upcoming year
that will cost...

Molander Corporation is a distributor of a sun umbrella used at
resort hotels. Data concerning the next month’s budget appear
below: Selling price per unit $ 25 Variable expense per unit $ 15
Fixed expense per month $ 8,600 Unit sales per month 1,010
Required:
1. What is the company’s margin of safety? (Do not round
intermediate calculations.)
2. What is the company’s margin of safety as a percentage of its
sales? (Round your percentage answer to 2 decimal places...

Molander Corporation is a distributor of a sun umbrella used at
resort hotels. Data concerning the next month’s budget appear
below: Selling price per unit $ 26 Variable expense per unit $ 18
Fixed expense per month $ 6,960 Unit sales per month 1,020
Required: 1. What is the company’s margin of safety? (Do not round
intermediate calculations.) 2. What is the company’s margin of
safety as a percentage of its sales? (Round your percentage answer
to 2 decimal places...

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