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.
Solution: Computation for the Profit Margin
Please see reference below. And please show all calculations.
Exercise 4-16. Multiproduct, Contribution Margin Ratio [LO 4] (Using Only the Data) Wilde Home & Garden is organized into three departments. The following sales and cost data are available for the prior year:
|
Particulars
|
Dept A
|
Dept B
|
Dept C
|
Total
|
|
Sales
|
$450,000
|
$600,000
|
$750,000
|
$1,800,000
|
|
Less: Variable cost
|
$270,000
|
$450,000
|
$450,000
|
$1,170,000
|
|
Contribution Margin
|
$180,000
|
$150,000
|
$300,000
|
$630,000
|
|
Less: Fixed Cost
|
$70,000
|
$90,000
|
$100,000
|
$260,000
|
|
Profit
|
$110,000
|
$60,000
|
$200,000
|
$370,000
|