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Case Study There have been significant discussions on climate change recently and the Australian Federal Government is providing financial incentives to businesses that shift to

Case Study
There have been significant discussions on climate change recently and the Australian Federal Government is providing financial incentives to businesses that shift to clean energy. Your company, Battery for Life Ltd, is conducting a feasibility study on whether to manufacture electric vehicle batteries (EVBs). The data relating to the product are provided below and you are required to use your accounting and statistics knowledge to evaluate if the company should manufacture EVBs or not.
In this case study, you are required to use accounting and statistical analyses to make a business decision on whether or not a product should be manufactured. It is highly recommended you use Microsoft Excel to complete all the required calculations.
QUESTION 1
Electric Vehicle Battery (EVB)
Use the data below to answer the questions:
The projected total sales for the EVB for the year ended 30 June 2022 are $9,000,000 and the projected total costs and operating expenses are as follows:
Table 1B
Item Amount ($)
Cost of goods sold 1,300,000
Sales Salaries expense 450,000
Office Salaries expense 500,000
Advertising expense 350,000
Office supplies expense 328,000
Rent expense 940,000
Insurance expense 230,000
Utility expense 290,000
Depreciation expense 282,000
Interest expense 280,000
Interest revenue 90,000
Tax expense 350,000
Round your final answers to two decimal places.
1. What is the gross profit amount?
2. What are the total operating expenses?
3. What is the profit before interest and tax (EBIT)?
4. What is the net profit?
5. Calculate the Gross Profit ratio, in percentage terms, for EVB in 2022.
6. Calculate the Net Profit ratio, in percentage terms, for EVB in 2022.
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