(10 Pts) An emergency executive meeting has just been called. The accounting dep

Question

(10 Pts) An emergency executive meeting has just been called. The accounting department has rushed the following report to you, the new hire from UTEP. As you are about to present the figures to your boss, you notice a page is missing, but the information provided contains the following: Net Sales, $400,000; Total Goods Available, $250,000; Inventory (Beginning). $40,000; Variable Expenses, $80,000 and Fixed Costs, $60,000. Gross Margin is fifty percent of Net Sales. The boss asks you for an Income Statement showing "All Major summary performance category figures contained in a marketing income statement including Total Cost 1. of Goods Sold, Contribution Margin and Net Profit (BT)-PARTICULARLY NP(BT). Prepare the Income Statement you would present. The price of the product is $10.00 (You must show all formulas and calculations.) Pes) What isth trongest rithmetic property that s rovided by theinformation bove. y that is provided by the information above.

Explanation / Answer

Answer:

Required :

1.Total cost of Good Sold

2. Conribution Margin

3. Net Profit Before Tax

Given:

Opening Stock : 40000$

Sales Value : 400000$

Closing Stock : 250000 $

Variable Expenses : 80000$

Fixed Cost : 60000$

Unit Price :10 $

Solution :

Calculation Of Contribution Margin

Net Sales : 400000 $

Add: Closing Stock : 250000 $

Less : Opening Stock :40000 $

Less: Variable Expenses : 80000 $

Less : Gross Profit : 200000 $ (50% of Sales)

It will be equals to Purchase = 330000 $

So Contribution Margin =

Total Sales - (Change In Inventory + Purchase + Variable Expenses )

= 400000 - ( (40000-250000) + 330000 + 80000 )

= $ 200000

Calculation of profil befor tax

Contribution Margin - Fixed Cost =

= 200000 - 60000

= 120000 $

So Net profit = 120000$

Calculation of Cost Of Good Sold :

A. Sales = 400000 $

B. Net profit = 120000 $

C Cost of good Sold = 280000 $ (Sales Minus Net Profit)

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