Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

To estimate the difference in profitability of the two stores, we need to calculate their respective gross profit margins, which is the difference between their

To estimate the difference in profitability of the two stores, we need to calculate their respective gross profit margins, which is the difference between their sales revenue and cost of goods sold as a percentage of sales revenue. The gross profit margin indicates how much profit a company makes before deducting its operating expenses.

Gross profit margin for Store A:

Sales revenue = $200,000 Cost of goods sold = $150,000 Gross profit = $200,000 - $150,000 = $50,000 Gross profit margin = ($50,000 / $200,000) x 100% = 25%

Gross profit margin for Store B:

Sales revenue = $200,000 Cost of goods sold = $150,000 Gross profit = $200,000 - $150,000 = $50,000 Gross profit margin = ($50,000 / $200,000) x 100% = 25%

Since both stores have the same sales revenue and cost of goods sold, they have the same gross profit margin and therefore the same level of profitability. The difference in their normal inventory or stock of goods does not affect their profitability since it is not directly related to their sales revenue or cost of goods sold.

Therefore, we can estimate that the two stores have the same profitability and there is no significant difference between them.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

Gemini was just updated See update close Conversation with Gemini On September 1 Eden County Club had an inventory of 40 golf shirts at a cost of 17 each The company uses a perpetual inventory system ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistics Unlocking The Power Of Data

Authors: Robin H. Lock, Patti Frazer Lock, Kari Lock Morgan, Eric F. Lock, Dennis F. Lock

1st Edition

0470601876, 978-0470601877

More Books

Students also viewed these General Management questions

Question

=+4 Which method makes the most sense? Justify your answer.

Answered: 1 week ago

Question

Explain how groupthink leads to mismanaged conflict.

Answered: 1 week ago

Question

List the three solutions for developing a more playful attitude.

Answered: 1 week ago

Question

Distinguish between hyperstress and distress.

Answered: 1 week ago