7BP a The Haines Corp. shows the follo... [FREE SOLUTION]

91影视

Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 7BP a (page 79)

The Haines Corp. shows the following financial data for 20X1 and 20X2:
20X1
20X2
Sales
$3,230,000
$3,370,000
Cost of goods sold
2,130,000
2,850,000
Gross profits
$1,100,000
$520,000
Selling and administrative expenses
298,000
227,000
Operating profits
$802,000
$293,000
Interest expense
47,200
51,600
Income before taxes
$754,800
$241,400
Taxes (35%)
264,180
84,490
Income after tax
$490,620
$156,910
For each year, compute the following and indicate whether it is increasing or
decreasing profitability in 20X2 as indicated by the ratio:
a. Cost of goods sold to sales.

Short Answer

Expert verified

The cost of goods sold to sales for 20X1 and 20X2 are 65.94% and 84.57%, respectively. It is increased by 18.63%.

Step by step solution

Cost of goods sold to sales for the year 20X1

$C o s t o f g o o d s s o l d t o s a l e s (20 脳 1) = \frac{C o s t o f g o o d s s o l d}{S a l e s} = \frac{$ 2, 130, 000}{$ 3, 230, 000} = 65.94 %$

Cost of goods sold to sales for the year 20X2

$C o s t o f g o o d s s o l d t o s a l e s (20 脳 2) = \frac{C o s t o f g o o d s s o l d}{S a l e s} = \frac{$ 2, 850, 000}{$ 3, 370, 000} = 84.57 %$

Change in cost of goods sold to sale ratio

$C h a n g e i n R a t i o = C o s t o f g o o d s s o l d t o s a l e s (20 脳 2) - C o s t o f g o o d s s o l d t o s a l e s (20 脳 1) = 84.57 % - 65.94 % = 18.63 %$

Unlock Step-by-Step Solutions & Ace Your Exams!

Full Textbook Solutions
Get detailed explanations and key concepts
Unlimited Al creation
Al flashcards, explanations, exams and more...
Ads-free access
To over 500 millions flashcards
Money-back guarantee
We refund you if you fail your exam.

Over 30 million students worldwide already upgrade their learning with 91影视!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Recommended explanations on Business Studies Textbooks

View all explanations

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Times mirror and glass company
Sales	\)126,000
Less: Cost of goods sold	93,000
Gross profit	\(33,000
Less: selling and administrative expenses	11,000
Lease Expenses	4,000
Operating profit*	\)18,000
Less: Interest expenses	3,000
Earning before taxes	\(15,000
Less: Taxes (30%)	4,500
Earning after taxes	\)10,500

Times mirror and glass company
Sales	\)126,000
Less: Cost of goods sold	93,000
Gross profit	\(33,000
Less: selling and administrative expenses	11,000
Lease Expenses	4,000
Operating profit*	\)18,000
Less: Interest expenses	3,000
Earning before taxes	\(15,000
Less: Taxes (30%)	4,500
Earning after taxes	\)10,500

91影视

Short Answer

Step by step solution

Cost of goods sold to sales for the year 20X1

Cost of goods sold to sales for the year 20X2

Change in cost of goods sold to sale ratio

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Accounting

Managers

Introduction to Business

Public Relations Business Studies

Family Business

Change Management

Study anywhere. Anytime. Across all devices.

	20X1	20X2
Sales	\(3,230,000	\)3,370,000
Cost of goods sold	2,130,000	2,850,000
Gross profits	\(1,100,000	\)520,000
Selling and administrative expenses	298,000	227,000
Operating profits	\(802,000	\)293,000
Interest expense	47,200	51,600
Income before taxes	\(754,800	\)241,400
Taxes (35%)	264,180	84,490
Income after tax	\(490,620	\)156,910