SG&A page

1.Look at the scatter-graph plot on the Blue Nile Spreadsheet(blue link to this below). Does Cost of Sales appear to be entirely variable, entirely fixed, or mixed?

2.Does Cost of Sales as a percentage of Net Sales appear to be stable across quarters, or has it changed from 2014 to 2015?

3.What estimate would you use for forecasting 2016 Q2 cost of sales?

4.Use the data in the SG&A page in the Blue Nile Spreadsheet to draw a scatter plot of Selling, General and Administrative expenses versus Net Sales. Does SG&A appear to be entirely variable, entirely fixed, or mixed?

5.Use the regression analysis tools on excel to draw a trend-line that intersects the y axis and displays the cost function on your chart.

6.What is the related time period for fixed cost(are fixed costs per week, per month, per year, or what)?

7.Prepare a forecasted contribution format income statement for the second quarter of 2016.

1) Use management's forecast for net sales

2) Use your estimated cost of sales percentage we came up with in question 3 for COS

3) Assume the cost function from question 5 is correct for SG&A expense.

DATA Blue Nile Quarterly Data 2016 Quarter1 Quarter2 2014 2015 Quarter1 Quarter2 Quater3 Quarter4 Net sales Cost of sales Gross profit SG&A expense Operating income 103,726 $106,571 $105,760 $157,459 84,601 86.40486,910 128,959 $19,125$20,167$18,850 $28,500 1751716,98016,290 21,643 $1,6083,182$2.5606857 Quarter1 Quarter2 Quarter3 Quarter4 106,447 $113,693 $109,943 $149,974 86474 91,604 88 712 120,921 $19,973$22,089 $21,231 $29,053 18,063 18,650 18,19221391 $1,910 $3439$3.039S7662 103,056 82,830 $20,226 18,97 2 ANALYSIS Use this area for your work. Scatterplot Cost of Sales versus Net Sales 140,000 120,000 100,000 80,000 60,000 40,000 20,000 $0$50,000 $100,000 $150,000 $200,000 Net Sales Cost of sales as a percentage of Net Sales 2016 Quarter1 Quarter2 2014 2015 Quarter1 Quarter2 Quarter3Quarter4 Cost of sales Net sales Cost of sales % Quarter1 Quarter2 Quarter3 Quarter4 86,474 91,604 88,712 120,921 106,447 113,693109.943149,974 31.24% 80.57% 80.69% 80.63% 84,60186,404 86,910 128,959 103,726 106,571 105,760 157459 82,830 103,056 DATA Blue Nile Quarterly Data 2016 Quarter1 Quarter2 2014 2015 Quarter1 Quarter2 Quater3 Quarter4 Net sales Cost of sales Gross profit SG&A expense Operating income 103,726 $106,571 $105,760 $157,459 84,601 86.40486,910 128,959 $19,125$20,167$18,850 $28,500 1751716,98016,290 21,643 $1,6083,182$2.5606857 Quarter1 Quarter2 Quarter3 Quarter4 106,447 $113,693 $109,943 $149,974 86474 91,604 88 712 120,921 $19,973$22,089 $21,231 $29,053 18,063 18,650 18,19221391 $1,910 $3439$3.039S7662 103,056 82,830 $20,226 18,97 2 ANALYSIS Use this area for your work. Scatterplot Cost of Sales versus Net Sales 140,000 120,000 100,000 80,000 60,000 40,000 20,000 $0$50,000 $100,000 $150,000 $200,000 Net Sales Cost of sales as a percentage of Net Sales 2016 Quarter1 Quarter2 2014 2015 Quarter1 Quarter2 Quarter3Quarter4 Cost of sales Net sales Cost of sales % Quarter1 Quarter2 Quarter3 Quarter4 86,474 91,604 88,712 120,921 106,447 113,693109.943149,974 31.24% 80.57% 80.69% 80.63% 84,60186,404 86,910 128,959 103,726 106,571 105,760 157459 82,830 103,056