The bill of materials for each product at Donald's Office Supply is very specific, right down to the number of casters needed for each office chair. Donald recognizes how important these documents are for planning purposes, but his operations managers appreciate them as well since they use this information to guide their material requisitions when it's time for production. Here are the budgeted product costs and selling prices, respectively, for the company's three key products:                                        Product cost                             Selling Price           Office chair                         $130                                       $229 Sit to Stand desk               $215                                        $365 Printer stand                     $110                                          $205 Donald has fine-tuned all cost expectations for his products, and his selling prices are quite stable for each product, as well. So, to say Donald was surprised when his accountant reported significantly less profit margin than what he was expecting is the understatement of the year. According to the accountant, the difference is almost entirely attributable to the significant and recent increase in shipping costs for the company's raw materials. These higher freight costs caused a 20% increase to the budgeted product costs presented above. 1. How much of a reduction in gross margin did each product sustain after recognizing the higher costs?                                                     Office Chair                       Sit to stand desk               Printer stand Gross margin pencentage      ________________%           ________________%      ______________%

The bill of materials for each product at Donald's Office Supply is very specific, right down to the number of casters needed for each office chair. Donald recognizes how important these documents are for planning purposes, but his operations managers appreciate them as well since they use this information to guide their material requisitions when it's time for production.

Here are the budgeted product costs and selling prices, respectively, for the company's three key products:

                                       Product cost                             Selling Price          

Office chair                         $130                                       $229

Sit to Stand desk               $215                                        $365

Printer stand                     $110                                          $205

Donald has fine-tuned all cost expectations for his products, and his selling prices are quite stable for each product, as well. So, to say Donald was surprised when his accountant reported significantly less profit margin than what he was expecting is the understatement of the year. According to the accountant, the difference is almost entirely attributable to the significant and recent increase in shipping costs for the company's raw materials. These higher freight costs caused a 20% increase to the budgeted product costs presented above.

1. How much of a reduction in gross margin did each product sustain after recognizing the higher costs?

                                                    Office Chair                       Sit to stand desk               Printer stand

Gross margin pencentage      ________________%           ________________%      ______________%