Question

Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base.
2017 2016
Net sales $522,200 $423,400
Cost of goods sold 219,400 135,440
Operating expenses 79,990 $77,090
Net earnings 40,420 28,670
a. 42.0% for 2017 and 32.0% for 2016.
b. 7.7% for 2017 and 6.8% for 2016.
c. 123.3% for 2017 and 100.0% for 2016.
d. 57.3% for 2017 and 50.2% for 2016.
e. 174.4% for 2017 and 199.2% for 2016.

Answer 1

Answer:

a. 42.0% for 2017 and 32.0% for 2016

Explanation:

Common size % for cost of goods sold = Cost of goods sold/Net sales

For 2017

= $219,400 / $522,200

= 0.4201456

= 42%

For 2016

= $135,440 / $423,400

= 0.31988663

= 31.99%