(10 Pts) An emergency executive meeting has just been called. The accounting dep
ID: 2571619 • Letter: #
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
Workings:
Calculation of Closing Inventories
It is given in the question, that Gross Margin= 50% of Net Sales
= 50% of 400000= $ 200,000
Calculation of Cost of Goods Sold
Cost of Goods Sold= Total Goods Available - Closing Inventories= 250,000-50,000= $ 200,000
Income Statement
Note:
1. It is assumed that Total Goods Available are inclusive of Opening Inventories
2. An alternative to calculate Cost of Goods Sold is given below:
We know that Gross Margin is 50% of Net Sales, that is 50% of the Selling Price
Thus, if the Selling Price is 10, Gross Margin = .50*10 = 5
Thus Cost of the Product = Selling Price- Gross Margin= 10-5= 5
No. of Units Sold= Net Sales/Selling Price= 400,000/10= 40,000 units
Thus, Total Cost of Goods Sold = Total Units Sold* Cost of Product= 40,000*5= 200,000
Particulars Amonut ($) Total Goods Available 250,000 Add: Gross Margin 200,000 Less: Net Sales 400,000 Closing Inventories 50,000Related Questions
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