Question

QS 4-14 Computing and analyzing gross margin ratio LO A2 $162,000 $790,000 $50,000 $269,000 Sales Sales discounts Sales returns and allowances Cost of goods sold 4,600 1,400 91,516 473,388 34,111 130,448 5,000 18,000 600 20,000 6,000 5,100 Compute net sales, gross profit, and the gross margin ratio for each separate case a through d. (Round your gross margin ratio to 1 decimal place; i.е.; 0.2367 should be entered as 23.7%.) Net sales Gross profit Gross margin ratio

Answer 1

Compute Net sales, Gross Profit and Gross margin ratio

Net sales = Gross sales – Sales Discounts – Sales returns and allowances

Gross Profit = Net Sales – Cost of goods sold

Gross margin ratio= (Gross Profit/ Net sales)*100

                                                                                                                                                               

	a	b	c	d
Net sales	162,000-5,000-20,000 =$ 137,000	790,000-18,000-6,000 =$ 766,000	50,000-600-5,100 =$ 44,300	269,000-4,600-1,400 =$ 263,000
Gross Profit	137,000-91,516 =$ 45,484	766,000-473,388 =$ 292,612	44,300-34,111 =$ 10,189	263,000-130,448 =$ 132,552
Gross margin ratio	45,484/137,000*100 =33.20%	292,612/766,000*100 =38.20%	10,189/44,300*100 =23%	132,552/263,000*100 =50.40%