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A discussion with Mackenzie Ackers, the controller, brings to light two possible explanations. She informs you that the industry gross profit percent in the retail
A discussion with Mackenzie Ackers, the controller, brings to light two possible explanations. She informs you that the industry gross profit percent in the retail drug industry declined fairly steadily for three years, which accounts for part of the decline. A second factor was the declining percent of the total volume resulting from the pharmacy part of the business. The pharmacy sales represent the most profitable portion of the business, yet the competition from discount drugstores prevents it from expanding as fast as the nondrug items such as magazines, candy, and many other items sold. Ackers feels strongly that these two factors are the cause of the decline. Jasper Drugs (\$ in thousands) Industry Gross Profit Percent for Retailers of Drugs and Related \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|} \hline \multirow[b]{2}{*}{2019} & \multicolumn{2}{|c|}{ Drug Sales } & \multicolumn{2}{|c|}{ Nondrug Sales } & \multicolumn{2}{|c|}{\begin{tabular}{l} Drug Cost of \\ Goods Sold \end{tabular}} & \multicolumn{2}{|c|}{\begin{tabular}{c} Nondrug Cost of \\ Goods Sold \end{tabular}} & \multirow{2}{*}{\begin{tabular}{c} \begin{tabular}{c} Drugs and Related \\ Products \end{tabular} \\ 35.6 \end{tabular}} \\ \hline & $ & 4,989 & $ & 8,661 & $ & 2,864 & $ & 5,829 & \\ \hline 2018 & & 4,936 & & 7.514 & & 2,759 & & 5,057 & 35.7 \\ \hline 2017 & & 4,622 & & 6,278 & & 2,588 & & 4,238 & 36.2 \\ \hline 2016 & & 4,545 & & 5,555 & & 2,536 & & 3,766 & 36.4 \\ \hline \end{tabular} Requirement a. Evaluate the explanation provided by Ackers. Show calculations to support your conclusions. Beain by computing the gross margin percentage for drug and nondrug sales for 2019 through 2016. (Round your answers to the nearest tenth percent, XX.X\%.)
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