Exhibit 13 In Addition a Regression Analysis Indicates the Following Relationship Between

question 74

Multiple Choice

Exhibit 13.1
Use the Information Below for the Following Problem(S)
Assume that you are an analyst for the U.S. Autoparts Industry. Consider the following information that you propose to use to obtain an estimate of year 2002 EPS for the U.S. Autoparts Industry:
$\begin{array}{lrr}\begin{array}{l}\\\\\text{Personal consumption expenditures}\\\text{Personal consumption expenditures}\\ \text{growth}\\\text{Industry Sales per share}\\\text{Industry Operating profit margin}\\\text{Industry Depreciation/Fixed Assets}\\\text{Industry Fixed asset turnover}\\\text{Interest rate}\\\text{Industry Total asset turnover}\\\text{Industry Debt/Total assets}\\\text{Industry Tax rate}\\\end{array}\\begin{array}{r}\\\text{Year 2003}\\\hline\text{\$6,800 Billion}\\\\\\ \$ 525 \\\\\\\\\\\\\\\\end{array}\\begin{array}{r}Estimated\\\text{Year 2004}\\\hline\\ 1.5 \% \\\\\\ 15 \% \\8.25 \% \\3\\6 \% \\1.2 \\45 \% \\36\%\end{array}\\end{array}$

In addition a regression analysis indicates the following relationship between growth in industry sales per share and personal consumption expenditures (PCE) growth is
%D Sales per share = 0.02 + 1.5(%DPCE)
-Refer to Exhibit 13.1.Obtain an estimate of the per share depreciation charge for the year 2004.

• A) $15.81
• B) $12.35
• C) $23.68
• D) $25.93
• E) $35

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Definitions:

Raw Materials Inventory

Raw Materials Inventory is the stock of materials that are on hand and available for use in the production process.

Finished Goods Inventory

Products that have completed the manufacturing process and are ready to be sold to customers.

Weighted Average Cost

A method of calculating the cost of goods sold and ending inventory cost by taking into account the cost of goods purchased at varying prices.

Beginning Inventory

The value of a company's inventory at the start of an accounting period, used in calculating cost of goods sold.