Question

Last Year, Miranda house boutique experienced a loss of 2% on a gross margin of 38% and expenses of 40% totaling $37000. The boutique owner plans for a 5% increase in net sales and cost of goods sold this year. If she can lower her expenses by $2000, how much profit can she earn this year (in dollars)? Set up a skeletal P&L statement to demonstrate your calculations and response.

Answer 1

Answer

She can earn a profit of $ 150 this year.

Calculations:

Last year

Trading A/c
To COGS (62%)	$ 1,147,000.00	By sales (37000/2%)	$ 1,850,000.00
To Gross Profit (38%)	$    703,000.00
	$ 1,850,000.00		$ 1,850,000.00
Profit and loss a/c
To Expenses	$    740,000.00	By Gross Profit	$    703,000.00
To Net Profit	$                     -	By net Loss	$      37,000.00
	$    740,000.00		$    740,000.00

This year

Trading A/c
To COGS (1147000*105%)	$ 1,204,350.00	By sales (1850000*105%)	$ 1,942,500.00
To Gross Profit	$    738,150.00
	$ 1,942,500.00		$ 1,942,500.00
Profit and loss a/c
To Expenses	$    738,000.00	By Gross Profit	$    738,150.00
To Net Profit	$            150.00	By net Loss	$                     -
	$    738,150.00		$    738,150.00

In case of any doubt, please comment.