Answer to Question #246879 in Accounting for Another you

Question

A. Choose the letter that corresponds to the correct answer. (Refer to the information below)

(Murayta Enterprises

Statement of Comprehensive Income

For the period ended, December 31, 2020

-Sales - 52,352.50

-Cost of Goods Sold - 16,137.50

-Gross Profit - 36,215.00

-Selling Expenses - 17,662.50

-General and Admin Expenses - 6,407.50

-Operating Income - 12,145.00

-Interest Expense - 525.00

-Net Income - 11,620.00)

1.) Using the vertical analysis, the company's cost of sales is:

A. 31%

B. 22%

C. 1%

D. 100%

2.) Using the vertical analysis, the company's:

A. Operating Expenses is 46%

B. Operating Profit is 23%

C. Other Expense is 1%

D. All are correct

3.) Common-size SCI of Murayta Enterprises provides:

A. 70% gross profit

B. 30% cost of goods sold

C. 22% net income

D. 13% general and andministrative expenses

Answer 1

1) 31%

Cost of Goods Sold - 16,137.50

Sales - 52,352.50

Therefore, the company's cost of sales= Cost of goods Sold/Sales*100%

$=16,137.50/52.352.50*100 = 31$

=31%

2) D) All are correct

Using vertical analysis, items are expressed as a percentage of the base item; in this case the sales.

Operating expenses matches the percentage

Operating expenses/Sales*100%

$=(17,662.50+6,407.50)/52,352.50*100$

= 46%

Operating profit $=12,145/52,352.50*100$

= 23%

Other Expense - $=525/52,352.50*100$

= 1%

3) C. 22% net income

Net income - 11,620

Sales - 52,350.50

$=11,620/52,350.50$

$=22$ %