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2022 Income Statement (Product Name:) Cone Creak Cat Cell Na Na Na Na 2022 Total Common...

2022 Income Statement
(Product Name:) Cone Creak Cat Cell Na Na Na Na 2022
Total		 Common
Size
Sales $63,964 $47,482 $54,393 $58,726 $0 $0 $0 $0 $224,564 100.0%
Variable Costs:
Direct Labor $14,878 $9,722 $11,356 $11,811 $0 $0 $0 $0 $47,767 21.3%
Direct Material $24,482 $20,330 $20,708 $23,236 $0 $0 $0 $0 $88,755 39.5%
Inventory Carry $0 $292 $1,207 $904 $0 $0 $0 $0 $2,402 1.1%
Total Variable $39,360 $30,343 $33,271 $35,951 $0 $0 $0 $0 $138,924 61.9%
Contribution Margin $24,605 $17,139 $21,122 $22,775 $0 $0 $0 $0 $85,640 38.1%
Period Costs:
Depreciation $3,024 $1,927 $2,947 $3,173 $0 $0 $0 $0 $11,071 4.9%
SG&A: R&D $858 $655 $510 $571 $0 $0 $0 $0 $2,595 1.2%
    Promotions $1,350 $1,350 $1,350 $1,350 $0 $0 $0 $0 $5,400 2.4%
    Sales $1,000 $1,000 $900 $900 $0 $0 $0 $0 $3,800 1.7%
    Admin $482 $358 $410 $443 $0 $0 $0 $0 $1,693 0.8%
Total Period $6,715 $5,290 $6,117 $6,437 $0 $0 $0 $0 $24,558 10.9%
Net Margin $17,890 $11,849 $15,005 $16,338 $0 $0 $0 $0 $61,082 27.2%
Definitions: Sales: Unit sales times list price. Direct Labor: Labor costs incurred to produce the product that was sold. Inventory Carry Cost: the cost to carry unsold goods in inventory. Depreciation: Calculated on straight-line 15-year depreciation of plant value. R&D Costs: R&D department expenditures for each product. Admin: Administration overhead is estimated at 1.5% of sales. Promotions: The promotion budget for each product. Sales: The sales force budget for each product. Other: Charges not included in other categories such as Fees, Write Offs, and TQM. The fees include money paid to investment bankers and brokerage firms to issue new stocks or bonds plus consulting fees your instructor might assess. Write-offs include the loss you might experience when you sell capacity or liquidate inventory as the result of eliminating a production line. If the amount appears as a negative amount, then you actually made money on the liquidation of capacity or inventory. EBIT: Earnings Before Interest and Taxes. Short Term Interest: Interest expense based on last year's current debt, including short term debt, long term notes that have become due, and emergency loans. Long Term Interest: Interest paid on outstanding bonds. Taxes: Income tax based upon a 35% tax rate. Profit Sharing: Profits shared with employees under the labor contract. Net Profit: EBIT minus interest, taxes, and profit sharing.
Other $6,851 3.1%
EBIT $54,231 24.1%
Short Term Interest $2,586 1.2%
LongTerm Interest $4,941 2.2%
Taxes $16,346 7.3%
Profit Sharing $607 0.3%
Net Profit $29,750 13.2%
Cash Flows from Operating Activities: 2022 2021
Net Income (Loss) $29,750 $18,543
Depreciation $11,071 $8,417
Extraordinary gains/losses/writeoffs $0 $0
Accounts Payable $2,132 $1,261
Inventory ($7,871) $1,532
Accounts Receivable ($3,213) ($2,408)
Net cash from operations $31,869 $27,345
Cash Flows from Investing Activities:
Plant Improvements ($39,800) ($32,300)
Cash Flows from Financing Activities:
Dividends Paid $0 $0
Sales of Common Stock $0 $4,119
Purchase of Common Stock ($2,461) $0
Cash from long term debt $11,291 $20,159
Retirement of long term debt $0 ($11,300)
Change in current debt (net) ($6,517) $15,527
Net cash from financing activities $2,314 $28,506
Net change in cash position ($5,618) $23,551
Closing cash position $36,007 $41,625
ASSETS 2022 2021
Common
Size
Cash $36,007 20.0% $41,625
Accounts Receivable $18,457 10.3% $15,244
Inventory $20,019 11.1% $12,147
Total Current Assets $74,483 41.4% $69,016
Plant & Equipment $166,060 92.4% $126,260
Accumulated Depreciation ($60,775) -33.8% ($49,704)
Total Fixed Assets $105,285 58.6% $76,556
Total Assets $179,768 100.0% $145,572
LIABILITIES & OWNERS' EQUITY
Accounts Payable $11,868 6.6% $9,736
Current Debt $23,296 13.0% $29,812
Long Term Debt $40,937 22.8% $29,646
Total Liabilities $76,101 42.3% $69,194
Common Stock $12,521 7.0% $12,938
Retained Earnings $91,147 50.7% $63,440
Total Equity $103,668 57.7% $76,378
Total Liab. & O. Equity $179,768 100.0% $145,572
If Chester Corp. were to buy all of it's shares outstanding at its current price, how much would it cost Chester Corp, excluding brokerage fees?
Select: 1
$30 million
$229 million
$333 million
$104 million
Business   Finance   
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Homework Answers

Answer #1

1. Number of Units sold Now = Direct labor / Direct Labor Cost per Unit

Number of Units sold Now = $14878 / 7.91 = 1881 Units

Selling Price = Sales / No. of Units Sold = $63964 / 1881 = $34

2. Total Fixed Costs = $6715

3. New Contribution Margin = (Current Margin - Increase in labor Cost) / Sales

New Contribution Margin = ($24605 - (8.51 - 7.91)*1881) / 63964

New Contribution Margin = ($23476.40) / 63964

New Contribution Margin = 36.7025%


4. Sales required to Breakeven = Fixed Costs / Contribution margin

Sales required to Breakeven = 6715 / 36.7025%

Sales required to Breakeven = $18295.75

Units sales required to Break even = Sales Required / Price

Units sales required to Break even = $18295.75 / 34.005

Units sales required to Break even = 540 Units (rounded off from 538 units)

Option D 540 Units

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