Asked by Sarah Saintilus on Jun 17, 2024
Verified
To determine the Year 2 and Year 1 trend percentages for cost of goods sold using Year 1 as the base.
A) 36.4% for Year 2 and 41.1% for Year 1.
B) 55.0% for Year 2 and 56.0% for Year 1.
C) 119.4% for Year 2 and 100.0% for Year 1.
D) 117.2% for Year 2 and 100.0% for Year 1.
E) 65.1% for Year 2 and 64.6% for Year 1.
Trend Percentages
Analysis technique that involves calculating the percentage change for a financial statement item over a period of time to identify patterns or trends.
Cost of Goods Sold
The direct financial outlays involved in creating a company's goods for sale, encompassing labor and material costs.
- Grasp the concept of trend percentages and common size percentages to analyze financial statements.
Verified Answer
AV
Alejandra ValenciaJun 17, 2024
Final Answer :
D
Explanation :
To calculate the Year 2 trend percentage for cost of goods sold using Year 1 as the base, we use the following formula:
Year 2 cost of goods sold / Year 1 cost of goods sold x 100% = Year 2 trend percentage
Plugging in the numbers from the given information, we get:
$1910 / $1630 x 100% = 117.2%
Therefore, the Year 2 trend percentage for cost of goods sold using Year 1 as the base is 117.2%.
To calculate the Year 1 trend percentage for cost of goods sold using Year 1 as the base (which should always be 100%), we can simply use the given information:
Year 1 cost of goods sold / Year 1 cost of goods sold x 100% = 100%
Therefore, the Year 1 trend percentage for cost of goods sold using Year 1 as the base is 100%.
Comparing the answer choices with these calculations, we can see that the best choice is D, which matches both of our calculated trend percentages.
Year 2 cost of goods sold / Year 1 cost of goods sold x 100% = Year 2 trend percentage
Plugging in the numbers from the given information, we get:
$1910 / $1630 x 100% = 117.2%
Therefore, the Year 2 trend percentage for cost of goods sold using Year 1 as the base is 117.2%.
To calculate the Year 1 trend percentage for cost of goods sold using Year 1 as the base (which should always be 100%), we can simply use the given information:
Year 1 cost of goods sold / Year 1 cost of goods sold x 100% = 100%
Therefore, the Year 1 trend percentage for cost of goods sold using Year 1 as the base is 100%.
Comparing the answer choices with these calculations, we can see that the best choice is D, which matches both of our calculated trend percentages.
Learning Objectives
- Grasp the concept of trend percentages and common size percentages to analyze financial statements.
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