Create a table comparing the gross profit for this product’s sales for the month of June under each of the two formulas (1) FIFO and (2) average. Calculate the gross profit margin under each formula.
Can you please help me wiht this question. just explain the questions. i just happen to have small confusion. just want to clear the doubt! THANKS^_^
Sure! I can help you with this question.
To create a table comparing the gross profit for this product's sales for the month of June under each of the two formulas (1) FIFO and (2) average, you would need some basic information. Specifically, you would need the following data for each product sold:
1. Sales Revenue: The selling price per unit.
2. Cost of Goods Sold (COGS): The cost incurred to produce each unit.
3. Quantity Sold: The number of units sold.
For the FIFO method, you would assume that the first units purchased are the first ones sold. So, you would need to know the purchase dates and quantities for each unit.
For the average method, you would calculate the average cost per unit based on the total inventory available and divide it by the total quantity of units.
The table would look something like this:
| Product | Sales Revenue | COGS FIFO | COGS Average | Gross Profit FIFO | Gross Profit Average |
|---------|---------------|-----------|--------------|------------------|---------------------|
| Product A | | | | | |
| Product B | | | | | |
| Product C | | | | | |
| ... | ... | ... | ... | ... | ... |
To calculate the gross profit under each formula, you would use the following formulas:
1. Gross Profit FIFO = Sales Revenue - COGS FIFO
2. Gross Profit Average = Sales Revenue - COGS Average
To calculate the gross profit margin under each formula, you would divide the gross profit by the sales revenue and multiply by 100 to get a percentage. The formula would be:
Gross Profit Margin = (Gross Profit / Sales Revenue) * 100
I hope this clarifies the process of creating the table and calculating the gross profit under each formula. Let me know if you have any further questions!