Question

Your company has sales of

$ 102 comma 800$102,800

this year and cost of goods sold of

$ 73 comma 900$73,900.

You forecast sales to increase to

$ 112 comma 500$112,500

next year. Using the percent of sales​ method, forecast next​ year's cost of goods sold.

The Tax Cuts and Jobs Act of 2017 temporarily allows​ 100% bonus depreciation​ (effectively expensing capital​ expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career.

The forecasted cost of goods sold​ (COGS) is

​$nothing.

Your company has sales of $102,800 this year and cost of goods sold of $73,900. You forecast sales to increase to $112,500 next year. Using the percent of sales method, forecast next year's cost of goods sold. The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation (effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your career. The forecasted cost of goods sold (COGS) is $ U. (Round to the nearest dollar.)

Answer 1

Current year sales = $102800

Current year COGS = $73900

So, COGS/sales = 73900/102800 = 71.89%

Next year sales = $112500

Using percent of sales method, next year COGS will again be 71.89% of next years sales

So, forecasted cost of goods sold = 71.89% of 112500 = $80873