Gross Margin Changes: Two Product Firm
Ben Shien’s Wonton Works produces two grades of dumpling wrappers, standard and deluxe. Sales and cost of sales for both products for 1999 and 2000 were:
|
1999 |
2000 |
|||
|
Standard |
(Dollars in thousands) Deluxe |
Standard |
Deluxe |
|
|
Sales |
$600 |
$900 |
$900 |
$600 |
|
Cost of sales |
$500 |
$600 |
$750 |
$400 |
Required
a. Determine Ben Shien’s total sales, gross profit, and gross profit percentage in each year.
b. Conduct a horizontal (percentage change) analysis of the sales, cost of sales, and gross margin amounts.
c. Explain why Ben Shien’s overall gross profit declined during 2000.