Case Study #1: Calculate the ratio of gross profit to sales and the ratio of income from operations to sales for each product.

Case Study #1 The controller of New Wave Sounds Inc. prepared the following product protability report for management, using activitybased costing methods for allocating both the factory overhead and the marketing expenses. As such. the controller has condence in the accuracy of this report. Total 53,600,000 2,530,000 51,020,000 792,000 Home Theater Wireless Wireless Speakers Speakers Headphones Sales 5 1,500,000 $1,200,000 $900,000 Cost of goods sold 1,050,000 T20,000 310,000 Gross prot 5 450.000 5 430.000 S 90.000 Marketing expenses 500.000 120.000 ?2.000 Income from operations 5 [150,000] 5 360,000 5 18,000 S 223,000 In addition, the controller interviewed the vice president of marketing. who provided the following insight into the company's three products: . The home theater speakers are an older product that is highly recognized in the marketplace. . The wireless speakers are a new product that was just recently launched. . The wireless headphones are a new technology that has no competition in the marketplace, and it is hoped that they will become an important future addition to the company's product portfolio. Initial indications are that the product is well received by CUStOITIEI'S. The controller believes that the manufacturing costs for all three products are in line with expectations. Based on the information provided