Net sales for the year were $700,000 and cost of goods sold was $441,000 for the

ID: 2445235 • Letter: N

Question

Net sales for the year were $700,000 and cost of goods sold was $441,000 for the company’s existing products. A new product is presently under development and will have an expected selling price of not more than $61 per unit in order to remain competitive with similar products in the marketplace.

Required:

a.Calculate gross profit and the gross profit ratio for the year.

b. What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the company’s gross profit ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Explanation / Answer

Question a. Net Sales 700000 Less: Cost of Goods Sold 441000 Gross Profit 259000.00 Gross profit ratio ( Gross profit/Sales) 37.00% Question b. Sales price 61.00 Less:Gross profit (61 x 37%) 18.91 Maximum Cost per unit 42.09 Answer: $42.09

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Net sales for the year were $600,000 and cost of goods sold was $366,000 for the

Net sales for the year were $700,000 and cost of goods sold was $441,000 for the

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Net sales for the year were $700,000 and cost of goods sold was $441,000 for the

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