9.1

Gross profit calculations Net sales for the year were $450,000 and cost of goods sold was $297,000 for the companys existing products. A new product is presently under development and has an expected selling price of not more than $75 per unit in order to remain competitive with similar products in the marketplace.

Required:

a.

Calculate gross profit and the gross profit ratio for the year.

Gross Profit Ration =

Gross Profit =

GPR =

b.

What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the companys gross profit ratio?

Selling Price =

Cost to manufacture =

Gross Profit =

9.2

Calculate operating income and net income Selling, general, and administrative expenses were $66,000; net sales were $300,000; interest expense was $7,100; research and development expenses were $31,500; net cash provided by operating activities was $79,200; net income was $16,800; income tax expense was $7,600; cost of goods sold was $165,000.

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Required:

a.

Calculate operating income for the period.

Operating Income =

GP =

GP =

b.

Calculate net income for the period.

Net Income =

Net Income =

9.3

Calculate basic EPS Net income was $659,250 for the year. Throughout the year the company had outstanding 18,000 shares of $2.50, $50 par value preferred stock and 105,000 shares of common stock.

Required: Calculate basic earnings per share of common stock for the year.

Basic Earning =

Net income available for common shares =

Net income available =

Basic earning =