3. Campus Stop is considering a contract to sell merchandise to a campus organiz
ID: 2549513 • Letter: 3
Question
3. Campus Stop is considering a contract to sell merchandise to a campus organization for $16,000. This merchandise will cost Campus Stop $12,500. What would be the increase or decrease to Campus Stop's gross profit and gross profit percentage? TIP: The impact on gross profit (a dollar amount) may differ from the impact on gross profit percentage. (Round "Gross Profit Percentage" to 1 decimal place.)
a. Sold merchandise for cash (cost of merchandise $152,590). $ 276,700 b. Received merchandise returned by customers as unsatisfactory (but in perfect condition) for cash refund (original cost of merchandise $810). 1,610 c. Sold merchandise (costing $9,450) to a customer on account with terms 2/10, n/30. 21,000 d. Collected half of the balance owed by the customer in (c) within the discount period. 10,290 e. Granted a partial allowance relating to credit sales that the customer in (c) had not yet paid. 1,820 1. Compute Sales Revenue, Net Sales, and Gross Profit for Campus Stop. 2. Compute the gross profit percentage. (Round your answer to 2 decimal places.)3. Campus Stop is considering a contract to sell merchandise to a campus organization for $16,000. This merchandise will cost Campus Stop $12,500. What would be the increase or decrease to Campus Stop's gross profit and gross profit percentage? TIP: The impact on gross profit (a dollar amount) may differ from the impact on gross profit percentage. (Round "Gross Profit Percentage" to 1 decimal place.)
Explanation / Answer
Working Note
Answer 1
Sales Revenue = $297,700 [refer working note above]
Net Sales = Sales Revenue - Sales Returns & Allowances - Sales Discount
= $297,700 - $3,430 - $210 = $294,060
Gross Profit = Net Sales - COGS = $294,060 - $161,230 = $132,830
Answer 2
Gross Profit Percentage = [ Gross Profit / Net Sales]* 100 = [$132,830 / $294,060] *100 = 45.17 %
Answer 3
Total Net sales after additional sales = $294,060 + $16,000 = $310,060
COGS after additional sales = $161,230 + $12,500 = $173,730
New Gross Profit amount = $310,060 - $173,730 = $136,330
New Gross Profit Percentage = [$136,330 / $310,060] * 100 = 43.97 %
Impact on gross profit amount = $136,330 - $132,830 = $3,500 increase
Impact on gross profit percentage = 43.97 % - 45.17 % = 1.2 % decrease
Transaction COGS ($) Sales ($) Sales Returns & Allowances ($) Sales Discount ($) a 152,590 276,700 b. (810) 1,610 c. 9,450 21,000 d. 21,000 * 50 % * 2 % = 210 e 1,820 Total $161,230 $297,700 $3,430 $210Related Questions
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