Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales. Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales. Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage. To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

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Answer 1

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

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Answer 2

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

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Answer 3

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

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Answer 4

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

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Answer 5

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Answer 6

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Answer 7

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Answer 8

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.