Required 1. Compute the amount of gross margin and the gross margin ratio for the two...

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Required 1. Compute the amount of gross margin and the gross margin ratio for the two years shown for each of these companies

business accounting

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Answer 1

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[1]

	Apple		Google
	Current	Prior	Current	Prior
Net Sales - A	$215,639	$233,715	$90,272	$74,989
Cost of Sales - B	$131,376	$140,089	$35,138	$28,164
Gross margin- C = A - B	$84,263	$93,626	$55,134	$46,825
Gross margin ratio - D = (C/A) x 100	39.1%	40.1%	61.1%	62.4%

[2]

Google earns more in gross margin per dollar.

[3a]
Yes, it outperforms as margin is 39%, more than 35%
[3b]
Yes, it outperforms the average of 35% as actual margin is 61%
[4a]
Its an UNFAVOURABLE trend as margin has decreased from 40% to 39%
[4b]
Its an UNFAVOURABLE trend as margin has decreased from 62% to 61%

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Answer 2

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