QUIZ 2 STUDY GUIDE
According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 50 new workstations at a cost of $250,000 each and also spends $5 million for an addition to its assembly plant to accommodate the new workstations, then its annual depreciation costs will rise by
$1,750,000
$700,000
$350,000
$17,500,000
None of these
Income Statement Data
Quarter 1
(in 000s)
Sales Revenues
$50,000
Operating Profit
14,400
Net Income
$ 9,555
Balance Sheet Data
Total Current Assets
$70,000
Total Assets
139,000
Total Current Liabilities
26,000
L-T Debt (draw against credit line)
23,000
Total Equity
90,000
Other Financial Data
Depreciation
$4,000
Dividend payments
$2,250
Based on the above figures, the company’s current ratio (defined as current assets divided by current liabilities, as per the Help screen for the Comparative Financial Performance page of the GSR) is
2.69
$44,000
5.38
0.371
None of these
Assume a company’s Income Statement for a given quarter is as follows:
Income Statement Data
Quarter 1
(in 000s)
Sales Revenues
$50,000
Production Costs
26,500
Delivery Costs
1,600
Marketing Costs
8,500
Administrative Expenses
2,000
Operating Profit
14,400
Net Interest
750
Income Before Taxes
13,650
Taxes
4,095
Net Income
$9,555
Based on the above data, which of the following statements is false?
Production costs are 53% of revenues, thus resulting in a gross profit margin (sales revenues less costs of goods sold) of 47%
Delivery costs are 2.8% of revenues and represent the company’s smallest cost component
Marketing costs are 17.0% of revenues
Administrative expenses are 4.0% of revenues
Net interest costs are 1.5% of revenues
Income Statement Data
Quarter
$1,750,000
$700,000
$350,000
$17,500,000
None of these
Income Statement Data
Quarter 1
(in 000s)
Sales Revenues
$50,000
Operating Profit
14,400
Net Income
$ 9,555
Balance Sheet Data
Total Current Assets
$70,000
Total Assets
139,000
Total Current Liabilities
26,000
L-T Debt (draw against credit line)
23,000
Total Equity
90,000
Other Financial Data
Depreciation
$4,000
Dividend payments
$2,250
Based on the above figures, the company’s current ratio (defined as current assets divided by current liabilities, as per the Help screen for the Comparative Financial Performance page of the GSR) is
2.69
$44,000
5.38
0.371
None of these
Assume a company’s Income Statement for a given quarter is as follows:
Income Statement Data
Quarter 1
(in 000s)
Sales Revenues
$50,000
Production Costs
26,500
Delivery Costs
1,600
Marketing Costs
8,500
Administrative Expenses
2,000
Operating Profit
14,400
Net Interest
750
Income Before Taxes
13,650
Taxes
4,095
Net Income
$9,555
Based on the above data, which of the following statements is false?
Production costs are 53% of revenues, thus resulting in a gross profit margin (sales revenues less costs of goods sold) of 47%
Delivery costs are 2.8% of revenues and represent the company’s smallest cost component
Marketing costs are 17.0% of revenues
Administrative expenses are 4.0% of revenues
Net interest costs are 1.5% of revenues
Income Statement Data
Quarter