
Why do better decisions regarding the purchasing and managing of goods for sale frequently cause dramatic percentage increases in net income?

Costing:
Costing is a technique used in cost accounting to determine the cost of a product. With the optimum use of costing a company can reduce the cost burden and increase the profit margin.
To explain: The reason for better decisions regarding the purchasing and managing of goods for sale frequently cause dramatic percentage increase in net income.
Answer to Problem 20.1Q
The net income is computed by the figures of sale and purchase so, if company manages purchase and sale optimally then there should be more net income of the company.
Explanation of Solution
The percentage of net income is depend on the percentage of cost of goods sold, so if percentage of cost of goods sold decreases the percentage of net income will increase.
Thus, manager should take better decision regarding purchase to increase the percentage of net income.
Want to see more full solutions like this?
Chapter 20 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
- 2. What is the mean profit margin as a percent of sales at Exotic Fruits? Round to 2 decimal places. 3. Of all the SKUs sold at Exotic Fruits, what is the maximum profit margin as a percent of sales at Exotic Fruits? Round to 3 decimal places. Pleae help me with these problems!arrow_forwardI am trying to find the accurate solution to this general accounting problem with the correct explanation.arrow_forwardDescribe how inventory is valued under FIFO and LIFO methods. Need help!arrow_forward
- Hello tutor please provide correct answer general accounting question with correct solution do fastarrow_forwardBurlington Systems estimated manufacturing overhead for the year at$420,000. Manufacturing overhead for the year was overapplied by $12,000. The company applied $390,000 to Work in Process. The amount of actual overhead would have been ____.arrow_forwardCan you explain the correct approach to solve this general accounting question?arrow_forward
- Please explain the solution to this general accounting problem with accurate principles.arrow_forwardCarrington Trading is a merchandising company. Last month, the company's cost of goods sold was $72,800. The company's beginning merchandise inventory was $24,500, and its ending merchandise inventory was $21,300. What was the total amount of the company's merchandise purchases for the month?arrow_forwardPlease provide the answer to this general accounting question using the right approach.arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningCornerstones of Cost Management (Cornerstones Ser...AccountingISBN:9781305970663Author:Don R. Hansen, Maryanne M. MowenPublisher:Cengage Learning
- Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningCollege Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College PubBusiness/Professional Ethics Directors/Executives...AccountingISBN:9781337485913Author:BROOKSPublisher:Cengage



