Question

Sales Cost of goods sold 2018 $ 82,000 76,800 2017 $ 75,000 42,300 2016 $60,000 49,200 2015 $56,000 35,100 2014 $50,000 30,000 Dollar amounts stated above are in thousands. 8 01:29:41 a. Compute trend percentages for the above items taken from the financial statements of Lopez Plumbing over a five-year period. Treat 2014 as the base year. b. State whether the trends are favorable or unfavorable. Complete this question by entering your answers in the tabs below. Required A Required B State whether the trends are favorable or unfavorable. Trends Sales Favorable Unfavorable Cost of goods sold < Required A Required B >
Can someone tell Can someone tell me if the Sales is Unfavorable or Favorable and the same thing for cost of goods sold?

Answer 1

ca oi8 وي 0 و 0 /7 2017 / كامي كامو واهو 164 % 150 % 120 8 112 % 100 % Cost of goods sold 256 % 141 % 164 of 117 % 100 % Calculation: Trend Percentage = (Item Amount + Base year Amount) & 100 2018: Sales = ($82,000 - $50,000)x100 = 164% 2017: Sales = ($75,000 - $50,000) x 100 3 150% 2016: Sales - ($ 60,000 = $50,000 Jx100 3 120% 2015: sales = ($56,000 & $50,000)x100 2 112% 2018: cost of Goods Gold = ($76,800 & $30,000)x 100 = 256% 2017! Cost of Goods sold = ($42,300 $30,000)x100 2 141% 2016: Cost of Goods Sold = ($49,200 + $30,000) x 100 23 164% 2015 Cost of Goods sold = ($35,000 $30,000) x 100 = 117%

Trends Sales favorable Cost of Goode sold Unfavorable Explanation: the trend of sales is favorable with an increase each year. However, the trend of cost of goods sold is unfavorable because it is increasing faster than sales. This means that gross profit margin is shrinking. Perhaps the increase in sales volume is being achieved through cutting sales price. Another possibidity is that the company's purchasing policies are becoming less efficient.