Gotcha Covered is a start-up company that helps busy parents by providing science kits for their children. Its first product is a kit for building a 3-D model of an atom. Raw materials for this 3-D atom model kit include foam balls and strong, yet bendable, wire. On December 31, 2024, Gotcha Covered reported the following for the Inventory section of its balance sheet.

RM Inventory $ 2,000

WIP Inventory 4,500

FG Inventory 10,500

Total $17,000

The first few items from the company's income statement are as follows.

Sales $258,000

Cost of Goods Sold 195,000

Gross Margin $ 63,000

Required

a. If Gotcha Covered desires a gross margin of 40%, is the company achieving its goal? b. What might the company consider doing in order to increase its gross margin percentage? Describe at least two specific options and explain how each option could positively and negatively affect the company's performance.

c.It is now one year later (2025). The following information summarizes the key product-related transactions throughout the year.

Total material purchases $145,000. Total direct materials used in production $138,500. Total direct labor costs $40,000. Total applied MOH $25,000. COGM $190,000. Cost of Goods Sold $180,000. Sales $265,000.

Present the Inventory section of the balance sheet for 2025, as well as the partial income statement through gross margin for the year ended December 31, 2025. d. What gross margin percentage did the company earn in 2025? Did it reach its goal or make progress toward its goal of 40%?

For all discussion board topics,to achieve maximum points you must:

• Postyourresponseto the discussion topic by answsering one of these questions:
  • Assuming total sales volume was the same from 2024 to 2025, what can you say about the trend in the company's product costs?
  • Trend in gross margin?
  • Do these trends suggest the company followed any of your suggestions/options from part b?
  • Answers must be substantial and not just a rewording or explanation of the articles provided.You should support your view with the facts and/or points from the reading,how the content relates to or is consistent/inconsistent with your ownexperience,how it relates to other material presented in the course so far.