Ms. Kane, the China and Glass buyer of Crystal Clear, Inc., was asked to present

ID: 3199125 • Letter: M

Question

Ms. Kane, the China and Glass buyer of Crystal Clear, Inc., was asked to present a yearly profit and loss in skeletal form to the divisional merchandise manager. Crystal Clear's statistical department: Gross sales Alteration and workroom costs Inward freight Indirect expenses Direct Expenses Customer returns and allowances Gross Purchases $135,000 $1,000 S 1,500 $ 28,600 $ 20,000 S 15,000 s 25,000 Ms. Kane must prepare a skeletal profit and loss statement for her department. 1- Develop a P &L; statement for Crystal Clear performance. 2- Must have a complete skeletal profit and loss statement. 3- Name the worksheet Crystal Clear P & L EC #1: If the goal is to achieve a 35% operating profit for the company, did Ms. Kane do a good job in achieving the goal or not? How did you determine your answer? (1. 5pts) If you answer this question type under the P& L statement in the same worksheet.

Explanation / Answer

Statement of Income of Ms. Kane

Particulars

Amount($)

Gross Sales

1,35,000.00

Less: Cash Discount (4%)

5,400.00

Less: Customer Return & Allowance

15,000.00

Net Sales

1,14,600.00

Purchase of Inventory

77,500.00

Add: Opening Inventory

49,500.00

Less: Closing Inventory

61,000.00

Cost of Goods Sold

66,000.00

Less: Freight Inward

1,500.00

Less: Alteration and workroom costs

1,000.00

Gross Profit

46,100.00

Less: General Overhead

11,000.00

Less: Advertising

9,000.00

Less: Salaries

20,000.00

Less: Rent

8,600.00

Total Cost

48,600.00

Net Profit

-2,500.00

Net Profit Percentage

-2%

Operating Expenses Percentage

42%

Analysis that: Ms Kane income statement shows a negative net profit percentage in compare with the industry average. company has net loss of 2% but in the industry then there are net profit of 6%. So the company should think about it and try to improve same.

Other hand the total operating expenses percentage is also high in case of Ms. Kane. The industry average is 40% but the Ms. Kona has 42%. So the increase operating percentage indicates that the total operating expenses in more & it should be reduced.

So the company should be focused on the cost management. The proper cost management will help to reduce the total cost and increase the total net profit as well as the total percentage of the net profit. The management should takes various strategic decisions and implement same accordance with that to get positive outcome from business.