Previous solution is incorrect. The bill of materials for each product at Donald's Office Supply is very specific, right down to the number of casters needed for each office chair. Donald recognizeshow important these documents are for planning purposes, but his operations managers appreciate them as well since they use this information to guide their materialrequisitions when it's time for production.Here are the budgeted product costs and selling prices, respectively, for the company's three key products:Product CostSelling PriceOffice chair$130$229Sit-to-stand desk215365Printer stand110205Donald has fine-tuned all cost expectations for his products, and his selling prices are quite stable for each product, as well. So, to say Donald was surprised when hisaccountant reported significantly less profit margin than what he was expecting is the understatement of the year.According to the accountant, the difference is almost entirely attributable to the significant and recent increase in shipping costs for the company's raw materials.These higher freight costs caused a 20% increase to the budgeted product costs presented above. (a)What gross margin percentage was Donald originally expecting to earn on each product, per the information provided above? (Round answers to 2 decimal places,e.g. 52.75%.)(b)Office chairGross margin percentage%Sit-to-stand desk%Printer stand%How much of a reduction in gross margin did each product sustain after recognizing the higher costs? (Round answers to 2 decimal places, e.g. 52.75%.)Gross margin percentageOffice chair%Sit-to-stand desk%Printer stand%

Gross Margin Percentage is the ratio of the Gross Profit to the Net Sales made during the period.…

(a) What gross margin percentage was Donald originally expecting to earn on each product, per the information provided above? (Round answers to 2 decimal places, e.g. 52.75%.) Office chair Sit-to-stand desk Printer stand Gross margin percentage % % % (b) How much of a reduction in gross margin did each product sustain after recognizing the higher costs? (Round answers to 2 decimal places, e.g. 52.75%.) Gross margin percentage Office chair % Sit-to-stand desk Printer stand % %

(a) What gross margin percentage was Donald originally expecting to earn on each product, per the information provided above? (Round answers to 2 decimal places, e.g. 52.75%.) Office chair Sit-to-stand desk Printer stand Gross margin percentage % % % (b) How much of a reduction in gross margin did each product sustain after recognizing the higher costs? (Round answers to 2 decimal places, e.g. 52.75%.) Gross margin percentage Office chair % Sit-to-stand desk Printer stand % %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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