Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Textbook Question
Chapter 4, Problem 4.8.3MBA
Gross profit percent and markup percent
Caterpillar Inc. (CAT) produces and sells various types of equipment, including tractors, loaders, and mining equipment. The following data (in millions) were adapted from recent financial statements of Caterpillar. 
Compare the results in parts (1) and (2) for Years 1 and 2. Comment on your comparison.
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Common-Sized Income Statement
Revenue and expense data for the current calendar year for Sorenson Electronics Company and for the electronics industry are as follows. Sorenson Electronics Company data are expressed in dollars. The electronics industry averages are expressed in percentages.
SorensonElectronicsCompany
ElectronicsIndustryAverage
Sales
$1,940,000
100
%
Cost of goods sold
(1,358,000)
(76)
Gross profit
$582,000
24
%
Selling expenses
$(329,800)
(9)
%
Administrative expenses
(116,400)
(9)
Total operating expenses
$(446,200)
(18)
%
Operating income
$135,800
6
%
Other revenue and expense:
Other revenue
38,800
4
Other expense
(19,400)
(3)
Income before income tax
$155,200
7
%
Income tax expense
(58,200)
(5)
Net income
$97,000
2
%
a. Prepare a common-sized income statement comparing the results of operations for Sorenson Electronics Company with the industry average. If…
Common-Sized Income Statement
Revenue and expense data for the current calendar year for Tannenhill Company and for the electronics industry are as follows. Tannenhill's data are expressed in dollars. The electronics industry averages are expressed in percentages.
TannenhillCompany
ElectronicsIndustryAverage
Sales
$4,000,000
100.0
%
Cost of goods sold
(2,120,000)
(60.0)
Gross profit
$1,880,000
40.0
%
Selling expenses
$(1,080,000)
(24.0)
%
Administrative expenses
(640,000)
(14.0)
Total operating expenses
$(1,720,000)
(38.0)
%
Operating income
$160,000
2.0
%
Other revenue and expense:
Other revenue
120,000
3.0
Other expense
(80,000)
(2.0)
Income before income tax expense
$200,000
3.0
%
Income tax expense
(80,000)
(2.0)
Net income
$120,000
1.0
%
a. Prepare a common-sized income statement comparing the results of operations for Tannenhill Company with the…
b. The vertical analysis indicates that the cost of goods sold as a percent of sales
by 8 percentage points, while selling expenses
- by 4 percentage points, and administrative expenses
by 1 percentage points. Thus, net income as a percent of
sales
by 3 percentage points.
Chapter 4 Solutions
Survey of Accounting (Accounting I)
Ch. 4 - If merchandise purchased on account is returned,...Ch. 4 - Prob. 2SEQCh. 4 - Prob. 3SEQCh. 4 - On a multiple-step income statement, the excess of...Ch. 4 - As of December 31, 20Y4, Ames Corporation's...Ch. 4 - What distinguishes a retail business from a...Ch. 4 - Prob. 2CDQCh. 4 - Prob. 3CDQCh. 4 - Prob. 4CDQCh. 4 - Prob. 5CDQ
Ch. 4 - When you purchase a new car, the “sticker price”...Ch. 4 - Prob. 7CDQCh. 4 - Differentiate between the multiple and single-step...Ch. 4 - Prob. 9CDQCh. 4 - Can a business earn a gross profit but incur a net...Ch. 4 - Prob. 11CDQCh. 4 - Prob. 12CDQCh. 4 - Determining gross profit During the current year,...Ch. 4 - Determining cost of goods sold For a recent year,...Ch. 4 - Purchase-related transaction Burr Company...Ch. 4 - Purchase-related transactions A retailer Is...Ch. 4 - Prob. 4.5ECh. 4 - Prob. 4.6ECh. 4 - Determining amounts to be paid on invoices...Ch. 4 - Prob. 4.8ECh. 4 - Sales-related transactions After the amount due on...Ch. 4 - Sales-related transactions Merchandise is sold on...Ch. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Adjustment for merchandise inventory shrinkage...Ch. 4 - Adjustment for Customer Refunds and Returns Assume...Ch. 4 - Prob. 4.17ECh. 4 - Multiple-step income statement On March 31, 20Y5,...Ch. 4 - Single-step income statement Summary operating...Ch. 4 - Multiple-step income statement Identify the enurs...Ch. 4 - Purchase-related transactions The following...Ch. 4 - Sales-related transactions The- following selected...Ch. 4 - Prob. 4.3PCh. 4 - Multiple-step income statement and report form of...Ch. 4 - Multiple-step income statement and report form of...Ch. 4 - Multiple-step income statement and report form of...Ch. 4 - Multiple-step income statement and report form of...Ch. 4 - Single-step income statement Selected accounts and...Ch. 4 - Prob. 4.5.2PCh. 4 - Prob. 4.6.1PCh. 4 - Prob. 4.6.2PCh. 4 - Prob. 4.1MBACh. 4 - Sales transactions Using transactions listed in...Ch. 4 - Prob. 4.3MBACh. 4 - Prob. 4.4MBACh. 4 - Prob. 4.5.1MBACh. 4 - Gross margin percent and markup percent Target...Ch. 4 - Gross margin percent and markup percent Target...Ch. 4 - Prob. 4.6MBACh. 4 - Gross profit percent and markup percent Deere &...Ch. 4 - Prob. 4.7.2MBACh. 4 - Gross profit percent and markup percent Deere &...Ch. 4 - Gross profit percent and markup percent...Ch. 4 - Gross profit percent and markup percent...Ch. 4 - Gross profit percent and markup percent...Ch. 4 - Prob. 4.9MBACh. 4 - Prob. 4.10.1MBACh. 4 - Gross profit percent and markup percent Companies...Ch. 4 - Prob. 4.10.3MBACh. 4 - Prob. 4.1CCh. 4 - Prob. 4.2CCh. 4 - Prob. 4.3.1CCh. 4 - Determining cost of purchase The following is an...Ch. 4 - Prob. 4.4.1CCh. 4 - Prob. 4.4.2CCh. 4 - Prob. 4.4.3CCh. 4 - Prob. 4.5C
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