Current Expenses Average monthly sales over the last quarter was $20,000 Cost of goods sold is...

Current Expenses

Average monthly sales over the last quarter was $20,000
Cost of goods sold is $10,000
Promotional costs are $1000
“Other” fixed costs are $1000
Taxes are 30% of your operating profit
This leaves you with $5,600 a month, of which, you need $5000 to live on

Expansion Costs

You have found a commercial office and storage space for $1500 a month.
You estimate it would cost you about $1500 a month to hire someone to work 20 hours a week
You believe that by doubling your promotional expenses that you could increase your sales by about 50%. (Your COGS would proportionately go up as well.)

SHOW YOUR WORK AND EXPLAIN YOUR REASONING TO ANSWER THE FOLLOWING:

CAN YOU AFFORD TO EXPAND?

HOW MUCH MONEY WOULD YOU HAVE LEFT AFTER EXPENSES?

HOW MUCH MONEY, IF ANY, COULD YOU REINVEST IN THE BUSINESS?

WHAT IF your sales instead doubled if you spent $3000 a month in promotion and you increased payroll to $2,500 to help keep up.

Expert Solution

ekkarill92 answered 2 years ago

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation...

BOK has sales of $500,000, Cost of Goods Sold of $140,000, administrative expenses of $20,000 depreciation expense of $10,000, and interest expense of $30,000. What is the net income for the firm using the following tax schedule? Taxable Income Tax Rate $ 1-50,000 10% $ 50,001-75,000 20% $ 75,001-100,000 30% $100,001-335,000 40% $335,001 + 50%

Grippers expects cost of goods sold to average 65% of the current month’s sales and the...

Grippers expects cost of goods sold to average 65% of the current month’s sales and the company expects to sell 4,300 pairs of shoes in March for $240 each. Grippers’ target ending inventory is $10,000 plus 50% of the next month’s cost of goods sold. Use this information plus the sales budget from Question 1 to prepare Grippers’ inventory, purchases, and cost of goods sold budget for January and February. Sales budget from question 1: Particulars: Cash Sales in January =...

Alamo company has sales, cost of goods sold, and average ending inventory for the current year...

Alamo company has sales, cost of goods sold, and average ending inventory for the current year in the following amounts: $650,000, $500,000,and $128,000,respectively. calculate the amount of the company's inventory turnover for the year. what is the company's average number of days to sell inventory

2015 2016 Sales Revenue $920,000 $840,000 Cost of Goods Sold 575,000 545,000 Interest Expense 20,000 20,000...

2015 2016 Sales Revenue $920,000 $840,000 Cost of Goods Sold 575,000 545,000 Interest Expense 20,000 20,000 Income Tax Expense 27,000 30,000 Net Income 61,000 52,000 Cash Flow from Operations 65,000 55,000 Capital Expenditures 65,000 55,000 Acc Receivable (net) 31 Dec 126,000 120,000 Inventory 31 Dec 196,000 160,000 Stockholders' Equity 31 Dec 450,000 400,000 Total Assets 31 Dec 750,000 675,000 Required: Calculate the following ratios for 2016. The 2015 results are given for comparative purposes. Round answers to one (1) decimal...

Calculate net sales: Cost of goods sold $74,500 Sales revenue $112,800 Operating expenses $23,600 Sales returns...

Calculate net sales: Cost of goods sold $74,500 Sales revenue $112,800 Operating expenses $23,600 Sales returns $4,600 Sales discounts $6,700 Inventory purchases $80,530

Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts...

Sales $50,400,000 Cost of goods sold $31,500,000 Variable expenses $6,300,000 Fixed expenses $7,150,000 Inventory $9,150,000 Accounts receivable $5,150,000 Other current assets $4,150,000 Fixed assets $7,150,000 a) What is the Net Profit Margin in PERCENT % (rounded to two decimal places)? b) What is the Asset Turnover rounded to two decimal places? c) What is the Return on Assets in PERCENT % (rounded to two decimal places)? d) What is the Size of the Total Assets used by the firm?

Consider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries

Consider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries ( we usually call this SG&A for selling, general and administrative) of 1750.0million, depreciation of 2250.0 million, and interest expense of 2300 million. tax rate =21%.a. generate an income statement and show net incomeb. what is the company's operating cash flow?c. if there are 775.2 million shares outstanding, what is the EPS?d. if the company has a payout ratio of...

Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of...

Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of $198,000, average invested assets of $4,400,000, and a hurdle rate of 11 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin answer to the nearest whole percentage, (i.e., 0.1234 should be entered as 12%). Round your Investment Turnover answers to 4 decimal places.) Please calculate...

Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of...

Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of $50,000, average invested assets of $2,100,000, and a hurdle rate of 9 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold...

Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of...

Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of $40,000, average invested assets of $2,250,000, and a hurdle rate of 11 percent. 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.) 2....

Question