A firm has sales of $750,000 and cost of goods sold of $415,000. The firm expects sales to increase by 6 percent next year. What is the gross profit amount expected to be next year if the firm uses the percentage of sales approach when compiling pro forma statements?

Question

Quizplus · Accepted Answer

To find the expected gross profit, first calculate the expected sales: $750,000 * 1.06 = $795,000. Then, calculate the expected cost of goods sold using the percentage of sales approach: $415,000 * 1.06 = $439,900. Finally, subtract the expected cost of goods sold from the expected sales: $795,000 - $439,900 = $355,100.

A Firm Has Sales of $750,000 and Cost of Goods