Problem:
Assume a company's Income Statement for Year 12 is as follows:
Income Statement Data Year 12
(in 000s)
Net Revenues from Footwear Sales $ 320,000
Cost of Pairs Sold 200,000
Warehouse Expenses 17,000
Marketing Expenses 45,000
Administrative Expenses 8,000
Operating Profit (Loss) 50,000
Interest Income (expenses) (10,000)
Pre-tax Profit (Loss) 40,000
Income Taxes 12,000
Net Profit (Loss) $ 28,000
Required:
Question 1) Based on the above data, which of the following statements is false?
i) Cost of pairs sold are 62.5% of net revenues.
ii) Marketing costs are 14.1% of net revenues.
iii) Administrative expenses are 2.5% of net revenues.
iv) Warehouse expenses are 5.3% of net revenues.
v) Interest expenses are 3.6% of net revenues.
Explain solution in detail.