Question

compare between the revenue and margin performance, How have gross margin, operating margin, and net income developed in relation to the fluctuations in revenue? for both companies

1)

Auto Wash Bot Ltd.

Income Statement

For the Year Ended December 31, 2015

Revenue	$375,000
Cost of Goods Sold	86,250
Gross Profit	288,750
Other Expenses
Advertising	35,400
Office Expense	22,750
Research	195,000
Wages and Salaries	40,000
Total Other Expenses	293,150
Income Before Taxes	(4,400)
Income Tax	0
Net Income	$(4,400)

2)

Popeye’s Muscle Wash Ltd

Income Statement

For the Year Ended December 31, 2015

Revenue	$375,000
Cost of Goods Sold	163,125
Gross Profit	211,875
Other Expenses
Advertising	5,200
Office Expense	17,400
Repairs and Maintenance	85,000
Wages and Salaries	50,000
Total Other Expenses	157,600
Income Before Taxes	54,275
Income Tax*	8,413
Net Income	$45,862

*Tax rate of 15.5% used.

Answer 1