Fatima Company is engaged in the business of women's clothing, sold only in the US.The income statement of Fatima Co. for the 2012 year is presented below. For 2013, the company is expecting a growth in the gross 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 (the existing product line ) in the US by 25% . 2. Add men's clothing for the first time in its product line; total of 10,000 men's suits will be sold in 2013 at an average price of $260 per unit. The suits will be purchased from a South African company at a price of $165 per unit and sold to the customers golbally. The company projects that 80% of the online customers will be within the US and the reamaining 20% will be international customers. For the international customers the shipping and handling cost willbe $30 (double of the shipping and handling expenses for the US online customers). 3. The cost of goods sold for the existing (US) product line consists of 80% variable and 20% fixed. (remember the cost behavior? The fixed will remain unchanged unless new fixed expenses are specifically identified in this project; existing amount of the variable expenses will increase in the ratio of the increase in sales). The operating expenses for the existing line of business are 45% fixed and 55% variable. (Note that this ratio may change). 4. The variable operating expenses for the online market will be 20% (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 $55,000/ per year. The 20% variable operating expenses do not include the additional shipping and handling chanrges which are to be incurred for the online customers. REQUIREMENTS: A. Calculate the net projected income for 2013, assuming the tax rate changes to 25%. (For the company as a whole) B. Calculate the profit margin for 2012 and 2013 and the percentage change in the net income. C. Show all calculations. 2012 2013 ------------------------------------------------ Sales (Only US) 955,000 Cost of Sales 592,100 F 118,420 (592,100 * .2) V 473,680 (592,100 * .8) Gross Profit 362,900 Operating Expenses 130,000 F 58,500 (130,000 * .45) V 71,500 (130,000 * .55) Operating Income 232,900 Income Tax (20%) 46,580 Net Income 186,320 Profit Margin 19.51%