Exercise 9.10

Calculate gross profit, cost of goods sold, and selling price MBI Inc. had sales of $900 million for fiscal 2019. The companys gross profit ratio for that year was 37.5%.

Required:

a. Calculate the gross profit and cost of goods sold for MBI for fiscal 2019.

b. Assume that a new product is developed and that it will cost $1,625 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal 2019.

c. From a management viewpoint, what would you do with this information?