Net Sales for the Year Were $300,000 and Cost of Goods

question 37

Essay

Net sales for the year were $300,000 and cost of goods sold was $174,000 for the company's existing products.A new product is presently under development and has an expected selling price of not more than $55 per unit in order to remain competitive with similar products in the marketplace.
Required:
(a.)Calculate gross profit and the gross profit ratio for the year.
(b.)What is the maximum cost per unit that can be incurred to manufacture the new product so that the product can be priced competitively and will not result in a reduction to the company's gross profit ratio?

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Definitions:

Uplift

The vertical elevation of the Earth's surface due to natural causes such as tectonic movements or volcanic activity.

Terraces

Flat, step-like surfaces on a sloped piece of land, created either by natural processes like river erosion and glacial activity or by human agricultural practices.

Active Channel

The portion of a river or stream that is currently used for the flow of water, often subject to frequent changes in course and volume.

Thunderstorms

Violent weather phenomena characterized by the presence of lightning and thunder, often accompanied by heavy rainfall.