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ABC, Inc.
Selected Income Statement data
Fiscal year end	12/31/2012	12/31/2013
(amounts in thousands of dollars)
Net sales	$7,438,311	$7,986,322
Cost of Goods Sold	4,692,112	4,998,998
Gross profit	$2,746,199	$2,987,324

Note: Required: a.

An analyst can sometimes estimate the variable cost as a percentage of sales for a particular cost by dividing the amount of the change in the cost item between two years by the amount of the change in sales for those two years. The analyst can then multiply the variable cost percentage times sales to determine the total variable cost. Subtracting the variable cost yields the fixed cost for that particular item. Follow above procedure to determine the cost structure for Cost of goods sold for ABC, Inc. Use the following structure in answering the question: change in CGS, change in Sales, variable cost %, variable cost amount, and fixed cost amount for each year, where applicable (round any % to two decimal places).

b.

ABC, Inc. projects sales to grow at the following percentages in future years: 2014, 6 percent; 2015, 8 percent; 2016, 10 percent. Using this information, project sales, cost of goods sold (breakdown costs into variable and fixed) and gross profit for ABC, Inc. for 2014 to 2016.

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