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Below are data for four scenarios. Scenario 1 is the base scenario and the other 3 scenarios are modifications to the base scenario. Sales Cost
Below are data for four scenarios. Scenario 1 is the base scenario and the other 3 scenarios are modifications to the base scenario. Sales Cost of Goods Sold Gross Profit Scenario 1 Scenario 2 Scenario 3 Scenario 4 $10,000 $20,000 $10,000 $10,000 8,000 10,000 6,000 8,000 $2,000 $10,000 $4,000 $2,000 Average Inventory $5,000 $ 5,000 $5,000 $ 4,000 Required: Answer the questions below each question and use cell references for calculations. 1. Compute the gross margin percent for each scenario. Scenario 1 Scenario 2 Scenario 3 Scenario 4 Gross Margin Percent 20% 50% 40% 20% 2. Compute the inventory turnover for each scenario. Scenario 1 Scenario 2 Scenario 3 Scenario 4 1.60 2.00 1.20 2.00 Inventory Turnover 3. Compute the gross margin return on inventory investment percent for each scenario. Scenario 1 Scenario 2 Scenario 3 Scenario 4 Gross margin return on inventory investment 40% 200% 80% 50% Please answer Q4 and Q5 per above information 4. For Scenarios 2 through 4, explain what change occurred relative to Scenario 1 to cause the gross margin return on inventory (GMROI) to change. You need to specifically discuss each scenario change separately in comparison to scenario 1 by discussing the changes in the gross margin percent and inventory 5. Explain to management what type of factors influence the gross margin return on inventory investment. Included in your explanation, please included at least one outside reference to support your comments. Make sure you are providing detailed explanation, which cannot be completed with a one or two sentence response
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