
Concept explainers
Introduction:
Selling and general administrative expenses are generally related to non core activities and yet it has to be incurred. To provide a check on such companies – company make a budget by linking it to expected Sales Levels. This provides a very useful yardstick to monitor and ensure that such expenses are not rising out of proportions.
- To Determine
Compute the Three years sales and Selling and General Administrative expenses of three Years.

Answer to Problem 2BTN
Solution:
Apple | |||
Details | Year ended Sept 26, 2015 | Year Ended Sept 27, 2014 | Year Ended Sept 28, 2013 |
$ Millions | $ Millions | $ Millions | |
Net Sales | 233,715 | 182,795 | 170,910 |
Selling General and Administrative Expenses | 14,329 | 11,993 | 10,830 |
Ratio of Net Sales | 6.1% | 6.6% | 6.3% |
Alphabet ( Google) | |||
Details | Year ended December 31, 2016 | Year ended December 31, 2015 | Year ended December 31, 2014 |
$ Millions | $ Millions | $ Millions | |
Net Sales | 90,272 | 74,989 | 66,001 |
Selling and Marketing Expenses | 10,485 | 9,047 | 8,131 |
General & Administrative Exp | 6,985 | 6,136 | 5,851 |
Sub Total | 17,470 | 15,183 | 13,982 |
Ratio of Net Sales | 19.4% | 20.2% | 21.2% |
Explanation of Solution
Explanation:
Downloaded respective annual report and tabulated the figures.
Conclusion:
Required Figures are tabulated above.
Introduction:
Selling and general administrative expenses are generally related to non core activities and yet it has to be incurred. To provide a check on such companies – company make a budget by linking it to expected Sales Levels. This provides a very useful yardstick to monitor and ensure that such expenses are not rising out of proportions.
- To Determine
Compute the ratio of Selling and General Administrative expenses as a percentage of net sales.

Answer to Problem 2BTN
Solution:
Apple | |||
Details | Year ended Sept 26, 2015 | Year Ended Sept 27, 2014 | Year Ended Sept 28, 2013 |
$ Millions | $ Millions | $ Millions | |
Net Sales | 233,715 | 182,795 | 170,910 |
Selling General and Administrative Expenses | 14,329 | 11,993 | 10,830 |
Ratio of Net Sales | 6.1% | 6.6% | 6.3% |
Alphabet ( Google) | |||
Details | Year ended December 31, 2016 | Year ended December 31, 2015 | Year ended December 31, 2014 |
$ Millions | $ Millions | $ Millions | |
Net Sales | 90,272 | 74,989 | 66,001 |
Selling and Marketing Expenses | 10,485 | 9,047 | 8,131 |
General & Administrative Exp | 6,985 | 6,136 | 5,851 |
Sub Total | 17,470 | 15,183 | 13,982 |
Ratio of Net Sales | 19.4% | 20.2% | 21.2% |
Explanation of Solution
Explanation:
Downloaded respective annual report and tabulated the figures.
Conclusion:
Ratio of Selling and General Administrative Expenses to net Sales is as follows
Apple:
Details | Year ended Sept 26, 2015 | Year Ended Sept 27, 2014 | Year Ended Sept 28, 2013 |
Ratio of Net Sales | 6.1% | 6.6% | 6.3% |
Alphabet (Google) | |||
Details | Year ended December 31, 2016 | Year ended December 31, 2015 | Year ended December 31, 2014 |
Ratio of Net Sales | 19.4% | 20.2% | 21.2% |
Selling and general administrative expenses are generally related to non core activities and yet it has to be incurred. To provide a check on such companies – company make a budget by linking it to expected Sales Levels. This provides a very useful yardstick to monitor and ensure that such expenses are not rising out of proportions.
- To Determine
Using the data from part 2 – we have to predict data for two more years and compare with actual if possible.

Explanation of Solution
Apple | ||||||
Details | Projection Year 2017 | Projection Year 2016 | Year ended Sept 26, 2015 | Year Ended Sept 27, 2014 | Year Ended Sept 28, 2013 | Total of three years actual |
$ Millions | $ Millions | $ Millions | $ Millions | $ Millions | $ Millions | |
Net Sales | 319,932 | 273,447 | 233,715 | 182,795 | 170,910 | 587,420 |
Selling General and Administrative Expenses | 20,234 | 17,294 | 14,329 | 11,993 | 10,830 | 37,152 |
Ratio of Net Sales | 6.3% | 6.3% | 6.1% | 6.6% | 6.3% | 6.3% |
Growth of 17% in Net Sales | Growth of 17% in net Sales | 1.278563418 | 1.069539524 | |||
Ratio of Selling and General Administrative is maintained based on three years sales | ||||||
Alphabet ( Google) | ||||||
Details | Projection Year 2018 | Projection Year 2017 | Year ended December 31, 2016 | Year ended December 31, 2015 | Year ended December 31, 2014 | Total of three years actual |
$ Millions | $ Millions | $ Millions | $ Millions | $ Millions | $ Millions | |
Net Sales | 123,573 | 105,618 | 90,272 | 74,989 | 66,001 | 231,262 |
Selling and Marketing Expenses | 14782 | 12,634 | 10,485 | 9,047 | 8,131 | 27,663 |
General & Administrative Exp | 10138 | 8,665 | 6,985 | 6,136 | 5,851 | 18,972 |
Sub Total | 24,920 | 21,299 | 17,470 | 15,183 | 13,982 | 46,635 |
Ratio of Net Sales | 20.2% | 20.2% | 19.4% | 20.2% | 21.2% | 20.2% |
Growth of 17% in net Sales | Growth of 17% in net Sales | |||||
Ratio of Selling and General Administrative is maintained based on three years sales |
Comparison with Actuals is not done as 2018 is still in progress for Alphabet (Google) and Published results were not available for 2017.
Cumulative Sales growth of 17% is maintained for first two years by both companies and is likely to continue. Selling and general administrative expenses for Apple (average for three years) is 6.2% and is likely to continue. Selling and General Expenses for Alphabet (Google Parent) was 20.2% for three years and is likely to continue for two more years. Another interesting observation – Apple is more of a product company and Alphabet is more of a service company and accordingly our expenses are also determined by Industry in which we operate.
Want to see more full solutions like this?
Chapter 22 Solutions
Fundamental Accounting Principles
- Please give me true answer this financial accounting questionarrow_forwardPlease given answer accounting questionarrow_forwardA business has a profit margin of 18% on total sales of $50,000,000. The firm holds total debt of $15,000,000, total assets of $60,000,000, and an after-tax interest cost on total debt of 6%. Determine the firm's Return on Assets (ROA).arrow_forward
- Calculate Jenkins' net sales for the period.arrow_forwardNeed solution. General accountingarrow_forwardTownsend Manufacturing has a predetermined overhead rate of $5 per machine hour. Last year, the company incurred $128,700 of actual manufacturing overhead cost, and the account was $4,500 over-applied. How many machine hours were used during the year?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





