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The Percent Of Sales Method Is A Forecasting Method That Predict Financial Eleme

The percent of sales method is a forecasting method that predict financial elements based on their relationship to
sales. In other words, these items increase proportionately as sales increase. This method can be applied to many, but not all, of the elements of the pro forma statements. Which of the following cannot be accurately predicted with this method?
Operating expenses
Capital investments
Advertising expenses
Accounts receivable
 
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  1. National Scan, Inc., sells ratio frequency inventory tags. Monthly sales for a 6-month period were as follows: Month: Sales Feb 50 Mar 52 Apr 54 May 54 Jun 59 Jul 65 Use an appropriate forecasting method to prepare forecast Sales. a) The May forecast by using the appropriate forecasting method is ________ (in 4 decimal places). b) The August forecast by using the appropriate forecasting method is ________ (in 4 decimal places). https://www.chegg.com/homework-help/questions-and-answers/national-scan-inc-sells-ratio-frequency-inventory-tags-monthly-sales-6-month-period-follow-q26404244 (Similar Question)
  2. The percent of sales method is based on historical information
  3. Part A – For Problems 1-10 Consider the Baseline simplified income statement displayed below, where it is assumed that purchases and other expenses account for, respectively, 50% and 40% of sales: Baseline Sales $1,000 Cost of goods sold Purchases (50% of sales) $500 Other expenses (40% of sales) $400 $ 900 Profit before taxes $ 100 (10 Points) For problems #1-5, prepare a modified income statement to show that the sales must be increased by 10% in order to increase the before-taxes profit by 10%. Increase Sales by 10% Sales $ #1 Cost of goods sold Purchases (50% of sales) $ #2 Other expenses (40% of sales) $ #3 $ #4 Profit before taxes $ #5 (10 Points) For Problems 6-10, prepare another modified income statement to show that, through the profit leverage, a 2% reduction in the purchasing costs of $500 will have the same impact on the before-taxes profit as the aforementioned 10% increase in sales. Reduce Purchases by 2% Sales $ #6 Cost of goods sold Purchases (48% of sales) $ #7 Other expenses (40% of sales) $ #8 $ #9 Profit before taxes $ #10
  4. Part A – For Problems 1-10 Consider the Baseline simplified income statement displayed below, where it is assumed that purchases and other expenses account for, respectively, 50% and 40% of sales: Baseline Sales $1,000 Cost of goods sold Purchases (50% of sales) $500 Other expenses (40% of sales) $400 $ 900 Profit before taxes $ 100 (10 Points) For problems #1-5, prepare a modified income statement to show that the sales must be increased by 10% in order to increase the before-taxes profit by 10%. Increase Sales by 10% Sales $ #1 Cost of goods sold Purchases (50% of sales) $ #2 Other expenses (40% of sales) $ #3 $ #4 Profit before taxes $ #5 (10 Points) For Problems 6-10, prepare another modified income statement to show that, through the profit leverage, a 2% reduction in the purchasing costs of $500 will have the same impact on the before-taxes profit as the aforementioned 10% increase in sales. Reduce Purchases by 2% Sales $ #6 Cost of goods sold Purchases (48% of sales) $ #7 Other expenses (40% of sales) $ #8 $ #9 Profit before taxes $ #10