Respuesta :
Sanchez's gross margin for 2nd year 6,500 ; $2,000
How is it calculated?
Below is a graph showing how the gross margin was calculated for year two:
Knowing that gross margin is sales minus cost of goods sold ($15,000 minus $8,500 equals $6,500),
To determine retained earnings, we must first determine the net income for both years, which is displayed below:
Annual Sales: 8,400
Less: the $4,300 cost of goods sold.
Operating costs ($3,800) are lower.
$300 in profit
Year 2 sales were $15,000
Cost of goods sold ($8,500) is lower.
Operating costs ($4,800) are lower.
income of $1,700
What is the Conclusion?
Thus, the retained earnings are equal to $2,000 ($300 + $1,700).
To calculate the retained earnings, we simply combined the net income from years 1 and 2.
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