Student

CHAPTER 21

270 Chapter 21

VCE Accounting Units 3 and 4 Solutions Manual

c

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Comparative graphs:

Breakdown of sales 2009 Breakdown of sales 2010

35% 45%

29% COGS Wages Office exp Net profit 8% 5% 15% 15% COGS Wages Office exp Net profit

48%

The fall in the gross profit ratio also had a detrimental effect on the net profit ratio. The percentage of the d sales dollar consumed by wages was steady at 15%. However, office expenses as a percentage of sales jumped from 5% to 8% of sales revenue. Office expenses increased by $5 170, which represents a 76% increase on a the previous year. This change in expenses must be investigated, especially in light of just a 10% increase in sales. It is unusual for expenses in the office area to increase by such an extent in a single period. PDF expenses increased from insert 25% of [Tony, please InDesign] [Tony, please PDF the following equation and insert in Total the following equation and20% to in InDesign] sales revenue. In summary, the gross profit ratio fell by 3 cents in the dollar, and expenses2009 increased by 3 cents in the dollar, thus 2009 2015 leading to a fall in the net profit 2015 ratio of 6%. Such a change must be arrested as soon as possible, because this trend will have dire consequences on the firm’s profitability if it is allowed to continue. d

Exercise 21.3

a Profit and loss statements: 2009 $ % 192 000 100.0 92 160 48.0 99 840 52.0 24 000 12.5 3 840 2.0 27 840 14.5 72 000 37.5

2009

d

Sales less Cost of goods sold Gross profit less Wages Net profit Advertising b Total expenses Net profit b

2009

Net profit

2010 $ % 215 040 100.0 97 690 45.4 117 350 54.6 26 400 12.3 4 200 2.0 30 600 14.3 86 750 40.3

38% 47%

COGS Wages Advert. NP

38% 47%

COGS Wages Advert. NP

2% 13%

2% 13%

For use in conjuntion with: VCE Accounting Units 3 and 4, fourth edition © Neville Box 2006, published by Macmillan Education Australia

Chapter 21

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VCE Accounting Units 3 and 4...