View to Wrap Text Genc Insert Page Layout Formulas Data Review Times New... . 14 . A- A BIU.L.S.A. EZ x fx Merge & Center $ Company A and Company B have taken different approaches to selling glassware Company A has decided to make gl em ware that sells for a premium at $16.98 per glass Company B has decided to make a less expensive glassware (without stems) that sells for $11.98 per glass Last year Company A sold 547,000 stemmed glasses Company B sold 1,388,000 glasses. Given the following additional information about each firm, construct an income statement for each company, and see which company had the higher gross margin revenue minus cost of goods sold). higher EBIT, higher taxable income, higher net income, and higher OCF. b. Company B is thinking of upgrading the quality of its glassware. Doing so will cause its cost per unit to rise by 18%, but it believes it can raise its price by 25% Its sales volume will fall by 15% (85% of its current volume). However, letting the market know that it has better quality glassware will require a doubling of the current selling, general, and administrative expenses. Using a spreadsheet, redo the income statement for this scenario. Does it improve net income and operating cash flow for Company B? How does the company now compare to Company A? Required: In the spreadsheet, use a separate cell for each piece of information, and then construct the income statement by using a formula or cell reference for each individual line of the statement Given Data Information Units sold Revenue per unit Cost per unit of glassware Fixed costs Selling general, and administrative expenses Depreciation expense Interest Expense Company A (stemware) 47.000 16.98 8.17 1,245,788.00 785,038.00 1,489,374.00 501,030.00 S S $ $ $ Company B Company B (without stems) upgrading quality) 1,388,000 1,179,800 11.98S 14.98 6.695 7.89 1,354,218.00 S 1.354,218.00 584,431.00 5 1,168,862.00 117.890.00 1,137.890.00 698,540.00 S 698,540.00 37.5% 37.556 Part Company B Part Company B den RE Cost of goods sold Gross margin or profit Parts and b Company A 14,382,060.00 6,919,990.00 7,462,070.00 1,245,788.00 785,038.00 1.489,374.00 5 $ $ r ive expenses 1.354,218.00 554.431.00 5 1,137,890.00 1 1.354,218.00 .168.862.00 1.137.390.00 $ Sellis general and w Depreciate expense ERIT Interest expens Taxable income