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-If a vertical analysis were performed relative to the year ended December 31,2010,the figure that would appear in the percent column for Cost of goods sold would be:
A)37.4%
B)38.1%
C)58.3%
D)61.5%

Question

Use the following to answer questions 
 
-If a vertical analysis were performed relative to the year ended December 31,2010,the figure that would appear in the percent column for Cost of goods sold would be:
A)37.4% 
B)38.1% 
C)58.3% 
D)61.5%

Quizplus · Accepted Answer

In vertical analysis, we express each line item as a percentage of a base amount, usually net sales or total revenue. Since the question does not mention the base amount, we assume that it is net sales. 
To calculate the percentage for Cost of goods sold (COGS), we divide the COGS amount for the year ended December 31, 2010, by the net sales amount for the same period, and then multiply by 100. 
Using the figures provided in the code, we can calculate the percentage for COGS as follows: 
COGS = 2,505,200
Net Sales = 6,572,600
COGS/Net Sales x 100 = 2,505,200/6,572,600 x 100 = 38.11%
Therefore, the answer is B, which represents the closest percentage to our calculation.

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