1. If gross sales increased to $1,500,00 what would the net sales and gross margin be?

2. If returns increased to $90,000, how would that affect gross margin?

3. If purchases decreased to $625,000, how would that affect gross margin?

4. If freight increased to $10,000, how would that affect gross margin?

5. What is cash discount, and how does it affect the cost of goods sold?

1 = Sales (Gross and Not) 2 = Cost of Goods Sold (at Cost) 3 = Direct Expenses (for the department) 4 = Indirect Expenses (for the total company) 5 = Profit or Loss (the bottom line in dollars) % OF SALES RETAIL 1,250,000 70,000 1.180,000 5.6% Profit and Loss Statement COST 1 Gross Sales Returns NET SALES 2 Opening Inventory 144,000 + Purchases 725,000 + Freight 6,000 = Total Goods at Cost 875,000 Closing Inventory 175,000 = Gross Cost of Goods Sold 700,000 - Cash Discounts 36,000 Net Cost of Goods Sold 664,000 + Alterations/Workroom 2,500 TOTAL COST OF GOODS SOLD 666,500 COGS GM 666.500 513,500 56.5% 43.5% 3 Direct Expenses Buying Salaries Selling Salaries Advertising Travel Supplies TOTAL DIRECT EXPENSES 90,000 115,000 37.000 13,000 5,000 260,000 260,000 22.0% Indirect expenses Rent Utilities Repair & Maintenance Depreciation TOTAL INDIRECT EXPENSES 110,000 30,000 28,000 15,000 183,000 183,000 443,000 70,500 Total Expenses Net Profit/Loss 15.5% 37.5% 6.0% 5 PROFIT OR LOSS? 152 chapter 8