2. If a department suffers a loss of 2.5% with expenses totaling $35,000 and net

Question

2. If a department suffers a loss of 2.5% with expenses totaling $35,000 and net sales of $98,000, calculate the following: a. Gross margin % b. Gross margin $ c. Loss $ 3. Complete a skeletal P&L; given the following information: Cost of Goods Sold: $189,250 Gross Margin: $143,500 Operating Expenses 32% 4. Set up a complete P&L; statement using the following figures: Opening Inventory (cost) $25,000 Closing Inventory (cost) $19,000 Gross Sales $83,000 Customer R&A; $750 Purchases (cost) $65,000 Freight (Transportation) $1,250 Salaries (Selling & Buying) $8,250 Rent & Utilities $6,400 Cash Discounts Received $1,200 Miscellaneous Expenses $250 Analyze the results obtained. What might the business consider if it desires to improve its profitability? 5. If customer R&A; in the handbags department totaled $11,500 and net sales were calculated at

Explanation / Answer

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2)

a) Gross margin is a company's total sales revenue minus its cost of goods sold (COGS), divided by total sales revenue.

Gross Margin = (98000 - 35000)/98000 = 0.643 or 64.3%

b) Gross Margin in $ = 98000 - 35000 = $63000

c) Loss = Cost price (C.P.) – Selling Price (S.P.) Profit or Loss is always calculated on the cost price.

So, loss = 2.5% of 35000 = $875

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