# Local Co. has sales of \$ 10.7 million and cost of sales of \$ 5.9 million. Its​ selling, general and administrative expenses are \$ 550 comma 000 and its research and development is \$ 1.2 million. It has annual depreciation charges of \$ 1.4 million and a tax rate of 35 %. a. What is​ Local's gross​ margin? b. What is​ Local's operating​ margin? c. What is​ Local's net profit​ margin?

Explanation:

The computation is shown below:

a. The gross margin is

Gross margin = (Sales revenues - Cost of sales) ÷ (Sales revenues) × 100

= (\$10.7 million - \$5.9 million) ÷ (\$10.7 million) × 100

= 45%

b. The local operating margin is

= (Operating income ÷ Sales) × 100

where,

Operating income is

= (Sales - cost of sales - selling, general & administrative expenses - research & development - Depreciation & Amortization) ÷ (Sales revenue) × 100

= (\$10.7 million - \$5.9 million - \$0.55 million - \$1.2 million - \$1.4 million) ÷ (\$10.7 million) × 100

= (\$1.65 million)  ÷ (\$10.7 million) × 100

= 15.42%

c. Net profit margin

= (Net profit ÷ Sales) × 100

where,

= (Sales - cost of sales - selling, general & administrative expenses - research & development - Depreciation & Amortization) × (1 - tax rate) ÷ (Sales revenue) × 100

= (\$10.7 million - \$5.9 million - \$0.55 million - \$1.2 million - \$1.4 million) × (1 - 0.35) ÷ (\$10.7 million) × 100

= (\$1.0725 million)  ÷ (\$10.7 million) × 100

= 10.02%

## Related Questions

Acitelli Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its most recent year of operations.Estimated manufacturing overhead \$ 351,960
Estimated machine-hours 8,400
Actual machine-hours 8,460
The estimates of the manufacturing overhead and of machine-hours were made at the beginning of the year for the purpose of computing the company's predetermined overhead rate for the year.
The applied manufacturing overhead for the year is closest to:_________.
A. \$357,012
B. \$354,474
C. \$355,489
D. \$352,951

B. \$354,474

Explanation:

The Overheads that are initially included in Work In Process before determination of Actual Overheads are called Applied Overheads.

Thus said we need to first determine the Predetermined overhead rate :

= \$ 351,960 /  8,400 machine hours

= \$41.90 per machine hour

Therefore,

Applied Overheads = \$41.90 × 8,460 machine hours

= \$354,474

Conclusion :

The applied manufacturing overhead for the year is closest to: \$354,474

Your company sponsors a 401(k) plan into which you deposit 10 percent of your \$123,000 annual income. Your company matches 75 percent of the first 10 percent of your earnings. You expect the fund to yield 12 percent next year. Assume you are currently in the 31 percent tax bracket. a. What is your annual investment in the 401(k) plan? (Round your answer to the nearest whole number. (e.g., 32))b. What is your one-year return?

A) Your own Contribution in 401(K) is \$12,000.

B) Total Value of fund after one year = \$21,000 × (1 + 12%)

= \$23,520.

Explanation:

A) Total Annual Income = \$120,000

Contribution in 401(K) = 10% of income

= \$120,000 × 10%

= \$12,000

your own Contribution in 401(K) is \$12,000.

Employee contribution after tax = \$12,000 × (1 31%)

= \$8,280

Contribution of employer = \$12,000 × 75%

= \$9,000

Total Contribution = \$12,000 + \$9,000

= \$21,000

Total Contribution in one year is \$12,000.

Yield on fund = 12%

Total Value of fund after one year = \$21,000 × (1 + 12%)

= \$23,520.

after tax return = (\$23,520 -\$8,280) / \$8,280

= 184%

After tax return is 184%.

You don't have to pay that income tax until you withdraw the money

The annual investment in the 401(k) plan is \$21,525, comprising \$12,300 from your contribution and \$9,225 from your company's match. The one-year return, counting an expected yield of 12%, would be \$24,108.

### Explanation:

The annual investment in the 401(k) plan is calculated by finding 10% of the annual income of \$123,000 which amounts to \$12,300. The company then matches 75% of this investment. So, the company contribution is 0.75 * \$12,300 = \$9,225. Therefore, the total annual investment into the 401(k) plan is \$12,300 (your contribution) + \$9,225 (company’s contribution) = \$21,525.

Your one-year return would be the total investment in the fund, including the expected 12% yield next year. So that's \$21,525 * 1.12 = \$24,108.

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Firm B has a 12% ROE. Other things held constant, what would its expected growth rate be if it paid out 25% of its earnings as dividends?

the expected growth rate is 9%

Explanation:

The computation of the expected growth rate is shown below:

As we know that

Retention ratio = (1 - dividend payout ratio)

So,

Retention ratio = (1  -0.25) = 0.75

Now

Growth rate = Retention ratio × ROE

= 0.75 × 12

= 9%

hence, the expected growth rate is 9%

We simply applied the above formula so that the correct value could come

And, the same is to be considered

At Bargain Electronics, it costs \$30 per unit (\$16 variable and \$14 fixed) to make an MP3 player at full capacity that normally sells for \$51. A foreign wholesaler offers to buy 3,580 units at \$28 each. Bargain Electronics will incur special shipping costs of \$3 per unit. Assuming that Bargain Electronics has excess operating capacity, indicate the net income (loss) Bargain Electronics would realize by accepting the special order. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) Should the order be accepted or rejected?

(17,900) net loss

Explanation:

51 - 16 = 35

Special order Contribution margin

28 sales price - 16 variable cost - 3 shipping cost = 9

Total contribution for the order

3,580 units x 9 CM= 32,220

3,580 x 14 fixed cost = (50,120)

(17,900) net loss

We should assume the fixed cost will increase because we are at full capacity.

Bargain Electronics would realize a loss of \$17,300 by accepting the special order.

### Explanation:

To determine the net income (loss) from accepting the special order, we need to calculate the cost of producing the units, including both variable and fixed costs, and subtract it from the revenue generated from selling the units to the foreign wholesaler. The cost to produce each unit is \$16 variable cost + \$14 fixed cost + \$3 shipping cost = \$33. So, the total cost to produce 3,580 units is \$33 × 3,580 = \$117,540.

The revenue from selling the units to the wholesaler would be 3,580 × \$28 = \$100,240. The net income (loss) is calculated by subtracting the total cost from the revenue: \$100,240 - \$117,540 = (\$17,300). Therefore, Bargain Electronics would realize a loss of \$17,300 by accepting the special order.

The primary topic of this question is calculating net income (loss) for a business.

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Oriole Company has collected the following information related to its December 31, 2017, balance sheet.Accounts receivable \$16,000
Accumulated depreciation—equipment 46,700
Cash 11,000

Equipment \$173500
Inventory 64,500
Supplies 5,000

Requried:
Prepare the assets section of Oriole's balance sheet.

## Oriole Company

Assets side of the Balance Sheet:

Assets:

Current Assets:

Cash                               \$11,000

Accounts Receivable      16,000

Supplies                           5,000

Inventory                       64,500           \$96,500

Non-current assets:

Equipment                 \$173,500

less acc. depreciation   47,700          \$125,800

Total Assets                                      \$222,300

Explanation:

The assets side of the balance sheet is usually prepared in the order of liquidity, starting with the most liquid assets, Cash in the Current Assets subsection, or working capital for running the operations of the business.  It ends with the most illiquid assets called non-current assets, which form the core resources of the entity in generating revenue.  The accumulated depreciation is subtracted from the non-current assets to obtain the net non-current or fixed assets value.

According to the Coase theorem, in the presence of externalities a private parties can bargain to reach an efficient outcome.
b government assistance is necessary to reach an efficient outcome.
c the initial distribution of property rights will determine the efficient outcome.
d the assignment of legal rights can prevent externalities.