Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter5: The Income Statement And The Statement Of Cash Flows
Section: Chapter Questions
Problem 2MC: The following information is available for Cooke Company for the current year: The gross margin is...
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Question
![Below is a major portion of the income statements of
KTA Inc. for 2020 and 2021:
Sales
Cost of Sales
Gross Margin
2020
P80,000
50,000
P30,000
2021
P97,200
72,000
P25,200
The firm sold its sole product for P8/unit during 2020.
Even though the sales units increased by 20% during 2021,
the gross margin declined. Disappointed with the results,
the owner asked for your assistance in analyzing the cause
of the gross margin decline.
Increase (decrease) in gross margin due to change in units sold.
A. (P4,800)
D. P16,000
B. P6,000
D. P26,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcdd59982-5886-4ff8-a86f-6b75d60b83d9%2F5abd1ecb-00e6-443a-b917-dc236003d802%2Fsh8aejo_processed.png&w=3840&q=75)
Transcribed Image Text:Below is a major portion of the income statements of
KTA Inc. for 2020 and 2021:
Sales
Cost of Sales
Gross Margin
2020
P80,000
50,000
P30,000
2021
P97,200
72,000
P25,200
The firm sold its sole product for P8/unit during 2020.
Even though the sales units increased by 20% during 2021,
the gross margin declined. Disappointed with the results,
the owner asked for your assistance in analyzing the cause
of the gross margin decline.
Increase (decrease) in gross margin due to change in units sold.
A. (P4,800)
D. P16,000
B. P6,000
D. P26,000
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