Question

Gavette Company reported the following information for the current year and prior​ year: Account Current year...

Gavette Company reported the following information for the current year and prior​ year:

Account

Current year

Percentage

Prior year

Net sales revenue

​$367,200

​100%

​$300,000

COGS

​$220,320

​?

​$240,000

Gross Profit

​$146,880

​40.00%

​$60,000

​Selling/General Exp.

$81,768

22.2722.27​%

​$12,000

Net income before tax

$65,112

​?

​$48,000

Income Tax

​$7,344

​2.00%

​$3,000

Net Income

$57,768

​?

​$45,000

What would a vertical analysis report with respect to current year selling and general​ expenses?

A.

An increase of $69,768

B.

A decrease of 22.27​%

C.

22.27​% of net sales revenue

D.

17.73​% of net sales revenue

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Answer #1

Correct answer-------C. 22.27​% of net sales revenue

Working

Current year Prior year
Account Amount Percentage Amount Percentage
Net sales revenue $ 367,200 100.00% $ 300,000 100.00%
COGS $ 220,320 60.00% $ 240,000 80.00%
Gross Profit $ 146,880 40.00% $ 60,000 20.00%
​Selling/General Exp. $ 81,768 22.27% $ 12,000 4.00%
Net income before tax $ 65,112 17.73% $ 48,000 16.00%
Income Tax $ 7,344 2.00% $ 3,000 1.00%
Net Income $ 57,768 15.73% $ 45,000 15.00%
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