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Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa...

Nicole's Getaway Spa (NGS) has been so successful that Nicole has decided to expand her spa by selling merchandise. She sells things such as nail polish, at-home spa kits, cosmetics, and aromatherapy items. Nicole uses a perpetual inventory system and is starting to realizeall of the work that is created when inventory is involved in a business. The following transactions were selected from among those completed by NGS in August.

Aug. 2 Sold a bundle of spa services with a merchandise basket. When sold separately, the spa service part of the bundle sells for $672 and the merchandise basket normally sells for $168. Together, the bundle was sold to Val Amy for cash at a selling price of $570 (total). Val booked a spa treatment for August 10, and she took the basket of goods with her. The goods had cost NGS $165.
Aug. 3 Sold 5 identical items of merchandise to Cosmetics R Us on account at a selling price of $670 (total); terms n/30. The goods cost NGS $570.
Aug. 6 Cosmetics R Us returned one of the five items purchased on August 3. The item could still be sold by NGS in the future and credit was given to the customer.
Aug. 10 Val Amy used one of the three spa treatments she had purchased as part of the bundle sold to her on August 2.
Aug. 20 Sold two at-home spa kits to Meghan Witzel for $470 cash. The goods cost NGS $181.
Aug. 22 Cosmetics R Us paid its remaining account balance in full.
  1. 2-a. Calculate the Sales Revenue and Cost of Goods Sold for the transactions listed above (but exclude Service Revenue for spa services).


  1. 2-b. What is Nicole’s Getaway Spa’s gross profit percentage (excluding Service Revenue)? (Round your answer to 1 decimal place.)

Solutions

Expert Solution

calculation for Sales revenue and cost of goods sold

Aug 2 - Spa services actual selling price = $672.00

Spa Merchandise actual selling price = $168.00

Total Price = $840.00

Bundle Selling Price = $570.00

Bundle Discount = $840.00 - $570.00 = $270.00

Bundle discount percentage = $27.00/$840.00 *100 =32.14 %

so the Spa Merchandise selling price after bundle discount = $168.00 - (168*32.14/1000) = $ 168.00 - $54.00 = $114.00

Cost of Merchandise = $165.00 so the transaction has a loss of $165.00 - $114.00 = $51.00

Aug 3 Sales 5 units - $670.00

Cost of 5 Units - $570.00

Profit = $670.00 - $570.00 = $100.00

Aug 6 Return Inwards at selling price ($670.00/5) = $134 and cost is ($570.00/5 = $114.00

Aug 10 - Spa services is not considered in the calculation

Aug 20 - Sales 2 units - $470.00

Cost of 2 Units - $181.00

Profit = $470.00 - $181.00 = $289.00

Total sales revenue = $114.00 + $670.00 - $134.00 + 470 = $1120.00

Total cost of goods sold = $165.00 + $570.00 - 114 +181 = $802.00

2. Gross Profit = Sales Revenue - Cost of goods sold = $1,120.00 - $ 802.00 = $318.00

Gross profit percentage = Gross profit / sales *100 = $318.00 / $1,120.00 *100 = 28.4%

Gross Profit / COGS *100 = $318.00 / $802.00 *100 = 39.7%

ekkarill92 answered 1 year ago
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