Question

Exercise 9.10 Calculate gross profit, cost of goods sold, and selling price MBI Inc, had sales...

Exercise 9.10
Calculate gross profit, cost of goods sold, and selling price
MBI Inc, had sales of $900 million for fiscal 2019. The company's gross profit ratio for that year was 37.5%
The company's gross profit ratio for that year was 37.%
Required:
a. Calculate the gross profit and cost of goods sold for MBI for fiscal 2019.
b. Assume that new product is developed and that it will cost $1,625 to manufacture.
    Calculate the selling price that must be set for this new product it is gross profit ratio is to be the same as the average achieved for all products for fiscal 2019.
c. From a management viewpoint, what you do with this information?

Homework Answers

Answer #1
Requirement a
Sales           900.00 million
Gross Profit @37.5%           337.50 million
Cost of Goods Sold           562.50 million
Requirement b
Cost of Goods Sold 1,625 million
Sales = 1625/ 62.5% 2600 million
Gross Profit 975 million
Gross Profit % 37.5%
Requirement c
Gross profit is a useful tool for management which is often used to estimate the cost of goods sold and inventory levels in between reporting periods.
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