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In 2010, Norwood Limited had sales and cost of sales of $250,000 and $62,500 respectively.

In 2010, Norwood Limited had sales and cost of sales of $250,000 and $62,500 respectively.  The company had shareholders equity of $100,000 and its assets were $125,000.  The company's gross margin for 2010 was:

14) Calculate gross margin percentage for the following independent situations.

a.Net sales$500,000

Purchases during the year340,700

Ending inventory35,000

Beginning inventory28,000

b.Net sales$650,000

Beginning inventory37,500

Ending inventory42,000

Purchases during the year270,000

c.Net sales$880,000

Purchases during the year420,000

Beginning inventory60,000

Ending inventory52,500

d.Net sales$232,000

 Ending inventory25,000

Purchases during the year127,000

Beginning inventory30,000

15) State some methods retailers might use to increase the gross margin on sales.

? Increase advertising to help boost sales.

? Increase the selling price of the products.

? Cut the cost of inventory purchases by taking advantage of purchase discounts,

  purchasing in large quantities, and searching for economical shipping rates.

16) Discuss methods companies could use to increase the rate of inventory turnover.

? Conduct market research to pinpoint which products sell the best to particular groups of customers.

? Decrease the selling price of products.

? Reduce the amount of inventory kept on hand.

17) Victory Stables had sales and cost of sales of $600,000 and $450,000 respectively in 2011.  The company had shareholders equity of $750,000 and its assets were $1,125,000.  Calculate the company's gross margin and gross profit percentage for 2011.

18) Smart-T Incorporated had sales and cost of sales of $1,850,000 and $1,100,000 respectively in 2011.  The company had shareholders equity of $925,000, liabilities of $775,000 and assets of $1,125,000.   Included in Smart-T's assets was inventory valued at $100,000 which was a $50,000 increase from the previous year's holdings.

Dec 09 2019 Read more Less More

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