Sales 1,530,500 102.2% Sales returns and allowances 32,500 2.2% Net sales 1,498,

Question

Sales                                     1,530,500     102.2%
Sales returns and allowances     32,500        2.2%
Net sales                                1,498,000     100%
Cost of goods sold                 1,043,000      69.6%
Gross profit                           455,000       30.4%
Selling expenses                     191,000       12.8%
Administrative expenses         104,000        6.9%
Total operating expenses         295,000      19.7%
Operating income                  160,000       10.7%
Other income                           8,500       .6%
Other expense                         6,000       .4%
Income before tax                  162,500       10.9%
Income tax expense                  71,500      4.8%
Net income                              91,000     6.1%

This is an example from my textbook. It doesn't explain where these percentages come from. I have to do other statements similar to this one, but won't be able to until I know which numbers they're using in the ratios.

Explanation / Answer

The percentages are percentages of net sales (which is 100%). So if we divide cost of goods sold by net sales (1,043,000/1,498,000) we get 69.6%. If we divide selling expenses by net sales (191,000/1,498,000)= we get 12.8%. And so on.

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