Fill in the missing values for the income statement below given the following in

Question

Fill in the missing values for the income statement below given the following information: Gross margin is 37% Direct labor costs are half the amount of Direct materials costs Times-interest-earned ratio is 28.0 Tax rate is 25%

Mashayekhi and Meckstroth Merchandising, Inc. Income Statement as of the year ending September 30, 2017 (in thousands) Sales revenue Less: Cost of goods sold $ 52,541 Direct materials Direct labor Manufacturing overhead 18,420 9,210 5,471 Total cost of goods sold Gross profit Less: Operating expenses 33,101 19,440 Selling expenses 3,220 General and administrative expenses Total operating expenses Earnings before interest and taxes Interest expense Income before income taxes Income tax expense NET INCOME (LOSS) 12,320 440

Explanation / Answer

Time interest earned ratio

Income before interest and tax/Interest expense

28 = EBIT/Interest expense

EBIT = 28 * interest expense

EBIT = 28*440

EBIT = 12320

Mashayekhi and Meckstroth Merchandising Inc

        Income Statement

as the year ending September 30 2017

$

$

Sales Revenue

$52,541

Less: Cost of goods sold

           Direct materials

$18,420

           Direct Labor (18420*50%)

$9,210

           Manufacturing Overhead ($33101-$18420+$9210)

$5,471

Total cost of goods sold

$33,101

Gross profit(52541*37%)

$19,440

Less: Operating expense

     Selling expense

$3,220

      General and administrative expense (7120-3220)

$3,900

        Total operating expense ($19440-$7120)

$7,120

Earnings before interest and taxes

12320

Interest expense

$440

Income before income tax

$11,880

Income tax expense at 25%

$2,970

Net income or loss

$8,910

Time interest earned ratio

Income before interest and tax/Interest expense

28 = EBIT/Interest expense

EBIT = 28 * interest expense

EBIT = 28*440

EBIT = 12320

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