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Smithsborough, Inc. had the following profit and loss statement for the year ending 2009 $50,000,000 Sales Cost of goods sold
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Answer #1

Answer of Part a:

Gross Margin Percentage = Gross Margin / Sales *100
Gross Margin Percentage = $40,000,000 / $50,000,000 *100
Gross Margin Percentage = 80%

Answer of Part b:

Net Profit Percentage = Net Profit / Sales *100
Net Profit Percentage = $19,000,000 / $50,000,000 *100
Net Profit Percentage = 38%

Answer of Part c:

Total Expenses = Cost of Goods Sold + Sales Expense + Promotion Expenses + Marketing Function + Indirect Overhead
Total Expenses = $10,000,000 + $10,000,000 + $4,000,000 + $1,000,000 + $6,000,000
Total Expenses = $31,000,000

Operating Expenses Percentage = Total Expenses / Net Sales *100
Operating Expenses Percentage = $31,000,000 / $50,000,000 *100
Operating Expenses Percentage = 62%

Answer of Part d:

Net Marketing Contribution = Net Sales – Cost of Goods Sold – Marketing Expenses
Net Marketing Contribution = $50,000,000 - $10,000,000 - $14,000,000
Net Marketing Contribution = $26,000,000

Answer of Part e:

Marketing Return on Sales = Net Marketing Contribution / Sales *100
Marketing Return on Sales = $26,000,000 / $50,000,000 *100
Marketing Return on Sales = 52%

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