Income statement Financial Data

Sales $120,000

Cost of goods sold (COGS) $80,000

Selling and General Admin Expenses $ 30,000

Taxes @40%

Financial Statement ( did I fill this out correct?)

Sales $120,000

COGS $80,000

Gross Profit $40,000

Selling and General Admin Expenses $30,000

Earnings Before Taxes $10,000

Taxes @ 40%

Net Income $6,000

After completing the Income Statement, you should be able to measure a company's COGS and its effect on the Gross Profit Margin (GPM). Based on your assessment of the firm's Income Statement, you are to report to senior management on these key components:( did I fill this out correct?)

a. What is the markup on COGS? 50%

b. Compare this company's markup to a COGS Industry Standard of 70%. What is the result? It is 20% below industry standard.

c. Explain how the difference in this company's markup and industry markup rates affect profitability, or levels of the GPM? The GPM would be less then industry markup standards. If all else is equal, this company can increase prices and receive a larger profit.