Question

Determine the prior Year and Current Year common-size percents for cost of goods sold using net sales as the base.(5 thousands) Net sales Cost of goods sold Current Year Prior Year Net sales $805,455 $457,648 Cost of good sold 396,644 137,882 Common-Size Percent for Cost of Goods Sold using Net Sales as the base: Choose Denominator: / Choose Numerator: Common-Size Percents Current Year: %Prior Year: %

Answer 1

Answer:

Common =size percents

                              Current Year   %           Prior Year            %

Net sales                 $805,455     100%         $457,648       100%

Cost of good sold     396,644     49.24%         137,882       30.13%

Explanation:

a) Data and Calculations:

Common =size percents

                              Current Year   %           Prior Year            %

Net sales                 $805,455     100%         $457,648       100%

Cost of good sold     396,644     49.24%         137,882       30.13%

b) Some investors and analysts analyse the balance sheet and the income statement of a company with the common-size percentages, whereby each line item is set as a percent of one standard amount.  On the balance sheet, the standard amount is the value of the total assets.  It is against this that every other asset and liability line item is set as a percent.  On the income statement, the standard amount is the net sales.  All other items are set on this figure to calculate their percentages.