Chapter 13 Homework x ezto.mheducation.com/hm.tpx?-0.2907574490897836 1521425520

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Chapter 13 Homework x ezto.mheducation.com/hm.tpx?-0.2907574490897836 1521425520864 According to the producer price dex database maintained by the Bureau of Labor Statistics, the average cost of computer equipment fell 8.1 percent between 2012 and 2013. Required: 1. Conduct a horizontal analysis by calculating the year-over-year changes in each line item, expressed in dollars and in percentages for the income statement of Computer Tycoon Inc. for the year ended December 31, 2013. (Decreases should be indicated by a minus sign. Round your percentage answers to 1 decimal place.) COMPUTER TYCOON, INC. Income Statements For the Year Ended December 31 Change in DollarsPercentage 2013 2012 Sales Revenue Cost of Goods Sold Gross Profit Selng, General, and Administrative Expenses Interest Expense Income before Income Tax Expense Incorme Tax Expense Net Income $ 116,000S144,000 68,000 77,900 66,100 7,60040,200 45,000 25,345 6,800 $ 7,740 $ 18,745 660 9,740 2,000 2-a. Conduct a vertical analysis by expressing each line as a percentage of total revenues. (Round your percentage answers to 1 decimal place.) COMPUTER TYCOON, INC. Income Statements For the Year Ended December 31 2013 2012 Sales Revenue Cost of Goods Sold Gross Profit 116.000 58,000 48,000 144,000 77.900 66,100

Explanation / Answer

Horizontal analysis:

Computer Tycoon Inc

Income statement for the year ended December 31   

Vertical analysis:

Computer Tycoon Inc

  Income statement for the year ended December 31   

Yes, Tycoon earns more profit on sales in 2013.

Particulars 2013 2012 Amount($) Percentage(%) Sales $116000 $144000 ($28000) 19.44% Cost of goods sold $68000 $77900 ($9900) 12.71% Gross profit $48000 $66100 ($18100) 27.38% Selling & administration expenses $37600 $40200 ($2600) 6.47% Interest expense $660 $555 $105 18.92% Income before income tax $9740 $25345 ($15605) 61.57% Income tax expense $2000 $6600 ($4600) 69.70% Net income $7740 $18745 ($11005) 58.71%

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