Determine the forecasted gross profit and net income for 2018 using 'Inventory Reduction' . Compute the debt to equity ratio as of December 2018 under these assumptions

Exhibit A Eco Bags, Inc. Manufacturing and Inventory Planning for 2018 US$2.50 per yard. Status Quo Inventory Reduction Effort Messenger . Spending Spending Direct materials 2.50 per yard Direct materials 2.50 per yard Direct materials 5.00 yards per bag Direct materials 5.00 yards per bag Bags per unit 10 bags per unit Bags per unit 10 bags per unit Direct materials per unit 50 yards per unit Direct materials per unit 50 yards per unit Expected purchases 1,100,000 yards Expected purchases 750,000 yards Direct Labor 600,000 fixed Direct Labor 600,000 fixed IMA EDUCATIONAL CASE JOURNAL IMA EDUCATIONAL CASE JOURNAL Manufacturing Overhead 900,000 fixed Manufacturing Overhead 900,000 fixed Denominator Activity Level 20,000 units Denominator Activity Level 20,000 units Expected completed production 20,000 units Expected completed production 16,000 units Expected sales 17,000 units Expected sales 17,000 units 2 8:39 PM a cdn.fbsbx.com 3 Units Units Beginning Expected Ending Beginning Expected Ending Raw materials (yards) 100,000 Raw materials (yards) 100,000 Work in process (units - 25% complete) 500 500 Work in process (units - 25% complete) 500 500 Finished goods (units) 1.500 Finished goods (units) 1.500 VOL. 10, NO. 4, ART. 2, DECEMBER 2017 VOL. 10, NO. 4, ART. 2, DECEMBER 2017 Cost Cost Beginning Expected Ending Beginning Expected Ending Raw materials Raw materials Work in process Work in process Finished goods Finished goods @ 75% Due to the pass-through of taxable losses through 2017, EcoBags has not issued tax dividends, The 15% Illinois replacement tax, paid at the S-corporation level, has been ignored for this case