Fatima Company i s engaged in the business of women's clothing, sold only in the US at the present time. The income statement of Fatima Co. for the 2021 year is presented below. For 2022, the company is expecting a growth in revenues as well as in net income. This expansion will be possible, however only if the following assumptions are correct. 1. Increase the sales of women's clothing in the US by 25%. 2. Add men's clothing for the first time in its product line; total of 4,000 men's suits will be sold in 2022 at an average price of $300 per unit. These coats will be purchased from a South African company at a price of $140 per unit and sold to only online customers. 3. The cost of goods sold for the existing (US) product line consists of 80% variable and 20% fixed. (Note that the fixed amount will remnain unchanged, while the variable postion will increase in direct proportion to the increase in sales. The cost of goods sold for the online business will be all variable. The operating expenses for the existing line of business are 45% fixed and 55% variable. Obviulsy, the dollar amount of the fixed costs and expenses will remain unchanged while the variable expenses will change in proportion to changes in sales. 4. The operating expenses for the online market will be 22% variable (as a percent of online sales of men's suits): In addition, there will be fixed opearting expenses for the online business in the amount of $70,000 / per year. REQUIREMENTS: A. Calculate the net projected income for 2022 , assuming the tax rate is to 21%. (The individual segments of the compnay do not pay the taxes: taxes are paid by the compnay as a whole). B. Calculate the GP \% for 2021 and 2022 for the compnay C. Calculate the profit margin for 2021 and 2022 and the percentage change in the net income. D. Calculate the Break-even points in dollars for 2021 E. Calculate the Degree of Operating leverage for 2021. Fatima Company Income Statements For the Year Ended 2021(Actual) and 2022 (Projected) \begin{tabular}{c|ccc} 2021 (Actual) & & 2022 (Projected) & \\ \hline \hline Womens & US-Womens & Men's-online & Total \\ \hline \end{tabular} Sales (Only US) \begin{tabular}{|c|c|} \hline \multicolumn{1}{|c|}{955,000} & 100.00% \\ \hline 592,100 & 62.00% \\ \hline 118,420 & 12.40% \\ \hline 473,680 & 49.60% \\ \hline 362,900 & 38.00% \\ \hline 130,000 & 13.61% \\ \hline 58,500 & 6.13% \\ \hline 71,500 & 7.49% \\ \hline 232,900 & 24.39% \\ \hline \end{tabular} \begin{tabular}{|l|} \hline \\ \hline \end{tabular} Operating Income Income Tax(20% now; 21% in 2022) Net Income \begin{tabular}{l|l} 186,320 & 19.51% \end{tabular} [Profit margin] Profit Margin 19.51% Percent Change from 202 Calculations Requireents
