Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the TaxRate, and a 5 percent increase in Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income Base Case 1% Increase in Gross Margin $2,110 $ 1,456 317 160 53 $1,986 $ 124 39 $85 $ 18 $67 $ 2131.10 $ 1470.46 319.67 160 53.28 2003.40 128 39 89 18.63 70.07 $ $ $ 1% Decrease in Tax Rate 2110 1456 317 160 53 1986 124 39 85 17 68 $ $ $ $ 5% Increase in Sales 2215.50 1528.70 332.33 160 55.39 2076.41 139.09 39 100.09 21.02 79.07

Given the following case, calculate the independent effects of a 1 percent increase in Gross Margin, a 1 percent decrease in the TaxRate, and a 5 percent increase in Sales. Colossal Chemical Corporation Year Ended December 31, 2021 ($000,000 omitted) Sales Cost of goods sold Selling, general, and administrative expense Depreciation Research and development Total costs and expenses Operating Income Interest expense Earnings before Income Taxes Provision for Income Taxes Net Income Base Case 1% Increase in Gross Margin $2,110 $ 1,456 317 160 53 $1,986 $ 124 39 $85 $ 18 $67 $ 2131.10 $ 1470.46 319.67 160 53.28 2003.40 128 39 89 18.63 70.07 $ $ $ 1% Decrease in Tax Rate 2110 1456 317 160 53 1986 124 39 85 17 68 $ $ $ $ 5% Increase in Sales 2215.50 1528.70 332.33 160 55.39 2076.41 139.09 39 100.09 21.02 79.07

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 31BEB

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