Question
Question 5: Exercise 179 The following items were taken from the financial statements of Rug, Inc.,...
Question 5:
Exercise 179
The following items were taken from the financial statements of Rug, Inc., over a four-year period:
|
Item |
2018 |
2017 |
2016 |
2015 |
||||
|
Net Sales |
$900,000 |
$650,000 |
$600,000 |
$500,000 |
||||
|
Cost of Goods Sold |
580,000 |
460,000 |
420,000 |
400,000 |
||||
|
Gross Profit |
$320,000 |
$190,000 |
$180,000 |
$100,000 |
Using horizontal analysis and 2015 as the base year, compute the
trend percentages for net sales, cost of goods sold, and gross
profit. Indicate whether the trends are favorable or unfavorable
for each item
|
Item |
2018 |
2017 |
2016 |
2015 |
Favorable or Unfavorable |
|
Net Sales |
% |
% |
% |
% |
|
|
Cost of Goods Sold |
% |
% |
% |
% |
|
|
Gross Profit |
% |
% |
% |
% |
Please show your work so I can study the material! Thank you!
Homework Answers
Answer #1
Answer:
|
Item |
2018 |
2017 |
2016 |
2015 |
|
|
Net Sales |
180.00% |
130.00% |
120.00% |
100.00% |
favorable |
|
Cost of Goods Sold |
145.00% |
115.00% |
105.00% |
100.00% |
unfavorable |
|
Gross Profit |
320.00% |
190.00% |
180.00% |
100.00% |
favorable |
Working notes for the above answer is as under
.the trend in Net sales is increasing which is favorable for company
With increasing in sales cost of goods sold also increases so increase in COGS is unfavorable for company
.the trend in gross profit is increasing which is favorable for company
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