Question 49:

Merkle Industries had the following consolidated income statement as of July 31, 2017.

			Merkle Industries, Inc
		Consolidated Statements of Income
	$ in thousands				12 Months Ended July 31, 2017
	Net Sales						$8,436,500
	Cost of Sales						3,374,600
	Gross Profit						5,061,900
	Operating, selling, and general and administrative expenses						2,530,950
	Operating profit						2,530,950
	Interest expense, net						180,650
	Income before income taxes						2,350,300
	Income tax expense						470,060
	Net Income						$1,880,240

Merkle estimates that net sales will increase by 6% in the year 2018. Cost of Sales are estimated to be 42% of net sales, Operating, selling, general and administrative expenses are expected to be 29% of net sales, Interest expense is expected to be $175,000 and Income Tax expense is expected to be 21%.

What is Merkles projected Cost of Sales for 2018?

	$1,417,332
	$3,577,076

	$3,755,930
	$4,791,932

None of these answers are correct.

Question 50:

Merkle Industries had the following consolidated income statement as of July 31, 2017.

			Merkle Industries, Inc
		Consolidated Statements of Income
	$ in thousands				12 Months Ended July 31, 2017
	Net Sales						$8,436,500
	Cost of Sales						3,374,600
	Gross Profit						5,061,900
	Operating, selling, and general and administrative expenses						2,530,950
	Operating profit						2,530,950
	Interest expense, net						180,650
	Income before income taxes						2,350,300
	Income tax expense						470,060
	Net Income						$1,880,240

Merkle estimates that net sales will increase by 6% in the year 2018. Cost of Sales are estimated to be 42% of net sales, Operating, selling, general and administrative expenses are expected to be 29% of net sales, Interest expense is expected to be $175,000 and Income Tax expense is expected to be 21%.

What is Merkles projected net income for 2018?