Cola Company made sales of $30,750 million during 2016. Cost of goods sold for t
ID: 2563204 • Letter: C
Question
Cola Company made sales of $30,750 million during 2016. Cost of goods sold for the year totaled $12,300 milion. At the end of 2015, Cola's inventory stood at $1,300 million, and Cola ended 2016 with inventory of $1,700 million. Compute Cola's gross profit percentage and rate of inventory turnover for 2016. Begin by computing Cola's gross profit percentage for 2016. (Round your answer to the nearest tenth of a percent, X.X%.) Cola's gross profit percentage for 2016 is 1 %. Now compute Cola's rate of inventory turnover for 2016. (Round your answer to one decimal place.) Cola's rate of inventory turnover for 2016 is Dimes.Explanation / Answer
Answer to Part 1
Computation of Gross Profit
Sales
30750
Less: Cost of Goods Sold
12300
Gross Profit
18450
Computation of Gross Profit Percentage in 2016
Gross Profit
18450
Sales
30750
Gross Profit Percentage [(18450/30750)*100]
60%
Answer to Part 2
Computation of Average inventory
Value of Inventory at the end 2015
1300
Value of Inventory at the end 2016
1700
Average Inventory [(1300+1700)/2]
1500
Computation of Inventory Turnover Ratio in 2016
Cost of Goods Sold
12300
Average Inventory
1500
Inventory Turnover Ratio [(12300/1500)]
8.2
Answer to Part 1
Computation of Gross Profit
Sales
30750
Less: Cost of Goods Sold
12300
Gross Profit
18450
Computation of Gross Profit Percentage in 2016
Gross Profit
18450
Sales
30750
Gross Profit Percentage [(18450/30750)*100]
60%