Use the Following Information About the Reimer Company to Do

question 75

Essay

Use the following information about The Reimer Company to do a vertical analysis of the income statement for the current year.Fill in the missing components in the table.
$$\begin{array} { | l | l | l | l | } \hline \text { Account } & \text { Current } & \text { Prior } & \text { Percent } \\\hline \text { Net sales revenue } & \$ 350,000 & \$ 312,000 & \\\hline \text { Cost of goods sold } & \$ 203,000 & \$ 215,000 & \\\hline \text { Gross profit } & \$ 147,000 & \$ 97,000 & \\\hline \text { Selling/general expenses } & \$ 80,500 & \$ 36,500 & \\\hline \text { Net income before tax } & \$ 66,500 & \$ 60,500 & \\\hline \text { Income tax } & \$ 10,500 & \$ 6,400 & \\\hline \text { Net income } & \$ 56,000 & \$ 54,100 & \\\hline\end{array}$$

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Definitions:

Drought Conditions

An extended period of deficient rainfall relative to the statistical multi-year average for a region, resulting in water scarcity that can affect agriculture, water supply, and ecosystems.

Average Inventory

The mean stock level held by a company over a certain period, calculated to understand inventory trends and management effectiveness.

Optimal Order Quantity

Optimal Order Quantity is the ideal amount of inventory a business should purchase to minimize costs while meeting demand without overstocking or understocking.

Economic Order Quantity

A formula used to determine the optimal order quantity that minimizes the total inventory holding costs and ordering costs.