Managerial Accounting. Chapter 13. Thank you The average price of a gallon of ga

Question

Managerial Accounting. Chapter 13. Thank you

The average price of a gallon of gas in 2010 jumped $0.43 (18 percent) from $2.36 in 2009 (to $2.79 in 2010). Let's see whether these changes are reflected in the income statement of Chevron Corporation for the year ended December 31, 2010 (amounts in billions) Total Revenues Costs of Crude Oil and Products Other Operating Costs 2010 2009 $205 $172 100 53 116 57 32 19 Income betore Income Tax Expense Income Tax Expense Net Income $ 19 $ 11 Required: 1-a. Compute the gross profit percentage for each year. (Round your answers to 1 decimal place.) Gross Profit Percentage 2009 2010 1-b. Assuming that the change from 2009 to 2010 is the beginning of a sustained trend, is Chevron likely to earn more or less gross profit from each dollar of sales in 2011? More Gross Profit OLess Gross Profit

Explanation / Answer

1a. Gross Profit Ratio:

2009 - 11.0%

2010 - 15.6%

1b. More Gross Profit

2a. Net Profit Margin

2009 - 6.4%

2010 - 9.3%

2b. Worse job

3a. Fixed Assets Turnover

2009 - 1.83

2010 - 2.05

3b. Better utilisation in 2010

4a. Return on Equity

2009 - 12.4%

2010 - 19.2%

4b. Better in 2010

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