Preparing a percentage-of-sales analysis. Discount Furniture, Inc., operates three retail furniture stores. A monthly income statement is prepared for each store. This statement shows both the direct operating expenses of the stores and the allocated indirect expenses. The combined statements for March 19X7 are shown below.

Instructions 1. For each store, prepare an analysis expressing each item on the income statement as a percent of net sales. Round the percents to one decimal place.
2. Compare the percentages for the three stores. Note the differences.
3. What types of questions would management ask about each of the differences listed in Instruction 2?

Transcribed Image Text:

Net Sales Cost of Goods Sold Gross Profit on Sales Direct Expenses: Salaries and Commissions Store 1 $120,000 62.000 Store 2 Store 3 $160,000 $88,000 91,000 45,000 $ 58,000 $ 69,000 $43,000 $ 12,000 $14,200 $12,200 Payroll Benefits 3,000 3,500 2,550 Delivery Fees 1,300 1,480 1,200 Advertising 2,240 2,360 2,240 Credit Card Fees 1,660 2,200 1,140 Supplies 1,240 1,320 1,160 Rent 2,100 2,200 1.600 Utilities. 560 950 625 Repairs and Maintenance 300 160 325 Property Taxes 250 320 250 Depreciation 2,000 2,000 1,140 Miscellaneous 1,400 1,600 1,130 Total Direct Expenses $ 28,050 $ 32,290 $25,560 Contribution After Direct Expenses $ 29,950 $ 36,710 $17,440