Question

Refer to the following mentioned data.

	(In millions)
	2017			2016			2015
Net sales	$	34,110		$	30,196		$	26,986
Cost of products sold		14,428			13,938			13,437
Gross margin	$	19,682		$	16,258		$	13,549

Required:
a. Calculate the gross profit ratio for each of the past three years. (Round your answers to 2 decimal places.)

2017 %

2016 %

2015 %

b. Assume that Campbell’s net sales for the first four months of 2018 totaled $12.83 billion. Calculate an estimated cost of goods sold and gross profit for the four months, using the gross profit ratio for 2017. (Round intermediate calculations to 2 decimal places. Enter your answers in millions rounded to nearest whole number (i.e., 5,000,000 should be entered as 5).)

cost of goods sold

gross profit

Answer 1

Gross Profit ratio is obtained by dividing Gross profit by sales

Gross profit= sales-cost of goods sold

2015

=($16,549/$26,986) *100

=61.32%

2016

($16,258/$30,196)*100

=53.84%

2017

($19,682/$34,110)*100

=57.70%

b.2017 GP ratio = 57.70%

1 billion = 1000 million

12.83 billion = ? million

Sales =12,830 Million

Gross Profit = sales*GP ratio

=$12,830*57.70%

Gross profit=$7,403 Million (Rounded to nearest whole number)

Cost of goods sold = Sales-Gross Profit

$12,830-$7,403

Cost of Goods Sold=$5,427