accounting 1 week 4 discussion

accounting 1 week 4 discussion - Poppa Rollos Gross Profit...

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Week 4 Discussion Prepare a multi-step income statement and make a recommendation about whether Lorange should undertake the expansion. Poppa Rollo's Pizza Income Statement Year Ended December 31, 2011 Sales Revenue= $195,000 Sales Returns= $ 10,700 Total Revenue= $184,300 Cost of Goods Sold= $ 85,200 Gross Profit= $ 99,100 Operating Expenses: Salary Expense $ 35,600 Depreciation Expense $ 4,800 Utilities Expense $ 3,700 Total Operating Expense $ 44,100 Income from Operations $ 55,000 Other Revenue + Expense: Gain on Sale of Land $ 24,600 Interest Expense $ 6,000 Net Income $ 73,600 I recommend we calculate: Gross Profit Percentage = Gross Profit / Net Sales Revenue
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Unformatted text preview: Poppa Rollos Gross Profit Percentage = 54% - 99,100 / 184,300 Lorange read that a successful 2 year old pizzeria with a GPP of at least 60% and a Net Income of at least $95,000 could expand. The net income is $73,600, $21,400 short of $95,000 and the gross profit percentage is short 6% the 60% requirement to expand with only 54 %. Based on the criteria I would not recommend an expansion. Focus must turn to growing the business rather than expanding at this time....
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accounting 1 week 4 discussion - Poppa Rollos Gross Profit...

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