Module 3 Assignment 1. Queencity Inc. has a a record year in 2016...

  1. Home
  2. Homework Library
  3. Business
  4. Finance
  5. Module 3 Assignment 1. Queencity Inc. has a a record year in 2016...

QuestionQuestion

Transcribed TextTranscribed Text

Module 3 Assignment 1. Queencity Inc. has a a record year in 2016. Revenues grew 13% from 2015 to $5,750,000. They improved Gross Margin by 50 bps to 66.5% in 2016. Seling expenses stayed consistent at 25% of revenue, but General Admin expenses increased 3% (from 9%) to 12% of revenue in 2016 due to higher headcount costs for the accounting department. The company's interest expense from debt is $100,000 in 2015 and 2016, and their tax rate is 35% Build multistep income statement using 2015 and 2016 data. Include a vertical analysis in terms of Revenue for 2015 and 2016. What was the YOY % change in EBIT and Net Income? What was the % change in terms of revenue (using the vertical analysis) for EBIT and Net Income for 2016 vs. 2015 and what contributed to the increase and/or decrease? 2. Queencity Inc. is contemplating changing its pricing for 2017 and wants to model the impact to volume/mix, revenue and gross profit. Below is a table of the company's current pricing for its products, quantity sold, and their respective gross margins. Solve for the (yellow section) NEW total quantity sold, total revenue and gross profit using the data below. Is the company better off keeping its current pricing (blue section), or changing it (yellow section)? Please explain. HINT: assume cost structure for COGS remains unchanged before and after price changes so you need to lind the COGS $ per unit from the current product mix and apply to the "After Price Increase" section to get to a new Gross Margin. Current Product Mx Salos Average Producté Sales Price Qty Sold GM% Gross Profit 2017 Price CHG 96(+/) %ChaP %ChgQtor1 Product 1 $42,00 25.000 60% $630,000 15% 1,000% -0,400% Acw to Interpret this data? For avery 1% Increase in Price, this product asperiences a reduction (-) In Product 2 $35,00 35,000 75% $918.750 20% 1,000% -0,250% quantity demanded of 40% remember demand Product 3 $55.00 75.000 72% 2.970.000 10% 1,000% -1,000% theory! Product 4 $13,25 125.000 63% 1.043.438 -5% -1,000% 0,250% Product 5 $15,25 250.000 61% 1325,625 20% 1,000% -0,150% Total $23,27 510.000 66,46% $7,887,813 12% Solve Product Mix Salos After Price Change (use the 2017 Price CHG % above) Product# Sales Price Qty Sold GM% Gross Profit Product 1 Product 2 ? ? Product 3 ? ? ? Product 4 ? ? ? Product 5 ? ? ? ? Total ? ? ? 3. You are the CFO at Queencity Inc. and the product management team presented you with 3 new product bunches. called Product 1, Product 2, and Product 3 (your product managers are not that creative when it comes to narring new products). You are presented with the estimated selling price, variable costs, fixed costs, and estimated quantity demanded. Solve for Contribution $ (CMS). Contribution Margin (CM%), Break-even Quantity (B/E Qty), and the EBITDA impact. Assume you sell the Qty Demanded When calculating Breakeven do not include a profit component in your B/E formula. Selling Price Varkable $ Elxed& Qty Demanded Solve CMS CMN B/E Qty EBITDA Product 1 $250.00 $85.00 $15,000.000 1000 ? ? ? ? Product 2 $285.00 $98.00 $14,000.000 75.000 ? ? ? ? Product 3 $175.00 $55.00 $11.000.000 98.000 ? ? ? ? Sovie Using the Contirbution $ above, what Is the EBITDA Impact If the Qty Demanded changed by the percents below for each product? Qty Demanded EBITDA Product 1 (-2)% Product 2 3% ? Product 3 (+3%) ?

Solution PreviewSolution Preview

These solutions may offer step-by-step problem-solving explanations or good writing examples that include modern styles of formatting and construction of bibliographies out of text citations and references. Students may use these solutions for personal skill-building and practice. Unethical use is strictly forbidden.

    By purchasing this solution you'll be able to access the following files:
    Solution.xlsx.

    $38.00
    for this solution

    or FREE if you
    register a new account!

    PayPal, G Pay, ApplePay, Amazon Pay, and all major credit cards accepted.

    Find A Tutor

    View available Finance Tutors

    Get College Homework Help.

    Are you sure you don't want to upload any files?

    Fast tutor response requires as much info as possible.

    Decision:
    Upload a file
    Continue without uploading

    SUBMIT YOUR HOMEWORK
    We couldn't find that subject.
    Please select the best match from the list below.

    We'll send you an email right away. If it's not in your inbox, check your spam folder.

    • 1
    • 2
    • 3
    Live Chats