Refer to the in Exercise 4-16.(Round all decimals answers to 4 places and dollar
ID: 2504719 • Letter: R
Question
Refer to the in Exercise 4-16.(Round all decimals answers to 4 places and dollar answers to the nearest dollar.)
Required
a. Calculate profit as a percent of sales in the prior year.
b. Suppose sales in the current year increase by 15 percent. Calculate profit as a percent of sales for the new level of sales and explain why the percent is greater than the one calculated in part a.
Information from 4-16
. Wilde Home & Garden is organized into three departments. The following sales and cost data are available for the prior year: (4-16)
Dept A
Dept B
Dept C
Total
Sales
$285,000
$900,000
$955,000
$2,140,000
Less: VC
125,000
565,000
755,000
1,445,000
CM
160,000
335,000
200,000
695,000
Less: FC
70,000
90,000
95,000
255,000
Profit
90,000
245,000
105,000
440,000
Please show work.
Dept A
Dept B
Dept C
Total
Sales
$285,000
$900,000
$955,000
$2,140,000
Less: VC
125,000
565,000
755,000
1,445,000
CM
160,000
335,000
200,000
695,000
Less: FC
70,000
90,000
95,000
255,000
Profit
90,000
245,000
105,000
440,000
Explanation / Answer
A]PROFIT AS A PERCENTAGE OF SALES IN THE PRIOR YEAR = PROFIT/SALES * 100
=440000/2140000 * 100
=20.56%
B]SALES IN CURRENT YEAR = 2140000*(1.15)
=2461000
NEW PROFIT = 695000*1.15
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