Below is a major portion of the income statements ofKTA Inc. for 2020 and 2021:SalesCost of SalesGross Margin2020P80,00050,000P30,0002021P97,20072,000P25,200The firm sold its sole product for P8/unit during 2020.Even though the sales units increased by 20% during 2021,the gross margin declined. Disappointed with the results,the owner asked for your assistance in analyzing the causeof the gross margin decline.A. 1.25%B. (1.25%)Percentage increase (decrease) in sales price.C. (2.125%)D. 2.125%

Here, Particulars 2020 2021 Sales 80000 97200 Cost of sales 50000 72000 Gross margin 30000…

Answered: Below is a major portion of the income…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 21E: Income statements for two different companies in the same industry are as follows: Required: 1....

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Similar questions

Income statements for two different companies in the same industry are as follows: Required: 1. Compute the degree of operating leverage for each company. 2. Compute the break-even point for each company. Explain why the break-even point for Quintex, Inc., is higher. 3. Suppose that both companies experience a 50 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Quintexs profits is so much greater than that of Trimax.
When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
If a company has three lots of products for sale, purchase 1 (earliest) for $17, purchase 2 (middle) for $15, purchase 3 (latest) for $12, which of the following statements is true? A. This is an inflationary cost pattern. B. This is a deflationary cost pattern. C. The next purchase will cost less than $12. D. None of these statements can be verified.
Pierce Corporation has the following gross profits for 2018 and 2019: Sales = 2019 - P810,000; 2018 - P792,000. Cost of sales = 2019 - 480,000; 2018 - 464,000. Gross profit = 2019 - P330,000; 2018 - P328,000. Sales price was 10% lower during 2019. The percent of increase (decrease) in cost price must be: The owners would like to know what reasons caused the current performance of the company and ask your opinion. Through review of the complete records you were able to obtain this additional information: (1) The selling price for every unit is P7.20 during 2018 and; (2) The marketing department did a tremendous job and was able to increase sales units by 20% during 2019. The increase (decrease) in gross profit because of the change in sales price is: a. P900 b. P1,080 c. (P4,320) d. P15,480
Pierce Corporation has the following gross profits for 2018 and 2019: Sales = 2019 - P810,000; 2018 - P792,000. Cost of sales = 2019 - 480,000; 2018 - 464,000. Gross profit = 2019 - P330,000; 2018 - P328,000. Sales price was 10% lower during 2019. The percent of increase (decrease) in cost price must be: The owners would like to know what reasons caused the current performance of the company and ask your opinion. Through review of the complete records you were able to obtain this additional information: (1) The selling price for every unit is P7.20 during 2018 and; (2) The marketing department did a tremendous job and was able to increase sales units by 20% during 2019. The increase (decrease) in gross profit because of the change in unit cost is: a. (P19,000) b. P10,800 c. (P10,800) d. P9,000
Use this problem to answer the following requirements: Mabuhay Corporation generated these gross profits during the past recent ears when the sales price was 10% lower during 2020 compared to 2019. 2020 Sales P1,944,000; 2020 Cost of Sales P1,152,000; 2019 Sales P1,900,800; 2019 Cost of Sales P1,113,600. The decrease in gross profit due to decrease in selling price must be
Chungkuyla Corporation generated these gross profits during the past recent ears when the sales price was 10% lower during 2020 compared to 2019. 2020 Sales P1,944,000; 2020 Cost of Sales P1,152,000; 2019 Sales P1,900,800; 2019 Cost of Sales P1,113,600. The decrease in gross profit due to decrease in selling price must be P216,000 P194,400 P172,800 P189,600
Mabuhay Corporation generated these gross profits during the past recent ears when the sales price was 10% lower during 2020 compared to 2019. 2020 Sales P1,944,000; 2020 Cost of Sales P1,152,000; 2019 Sales P1,900,800; 2019 Cost of Sales P1,113,600. The decrease in gross profit due to decrease in selling price must be * P216,000 P194,400 P172,800 P189,600
Presented below are excerpts from the income statements of Ralos Company for the years ended December 31, 2021 and 2020. 2021 2020 Inc (Dec) Net sales P2,750,000 P2,500,000 P250,000 Cost of goods sold 1,584,000 1,600,000 ( 16,000) Gross margin P1,166,000 P 900,000 P234,000 The unit cost decreased by 10% on January 1, 2021. What is the effect on sales due to change in selling price? Group of answer choices P275,000 increase P250,000 increase P 0 P 75,000 increase
Presented below are excerpts from the income statements of Ralos Company for the years ended December 31, 2021 and 2020.     2021     2020 Inc (Dec) Net sales P2,750,000 P2,500,000 P250,000 Cost of goods sold 1,584,000 1,600,000 (   16,000) Gross margin P1,166,000 P   900,000 P234,000 The unit cost decreased by 10% on January 1, 2021. What is the effect on sales due to change in selling price? cite if increase or decrease
Presented below are excerpts from the income statements of Ralos Company for the years ended December 31, 2021 and 2020.     2021     2020 Inc (Dec) Net sales P2,750,000 P2,500,000 P250,000 Cost of goods sold 1,584,000 1,600,000 (   16,000) Gross margin P1,166,000 P   900,000 P234,000 The unit cost decreased by 10% on January 1, 2021. What is the effect on sales due to change in selling price?
Presented below are excerpts from the income statements of Ralos Company for the years ended December 31, 2021 and 2020.     2021     2020 Inc (Dec) Net sales P2,750,000 P2,500,000 P250,000 Cost of goods sold 1,584,000 1,600,000 (   16,000) Gross margin P1,166,000 P   900,000 P234,000 The unit cost decreased by 10% on January 1, 2021. What is increase (decrease) in cost of goods sold due to volume?

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