Answer:
Mercedes, Co.
Gross profit percentage for each quarter:
= Gross profit / Sales x 100
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Gross profit $ 608,700 $ 605,600 $ 604,300 $ 606,900
Sales revenue $ 913,800 $ 923,300 $ 921,600 $ 929,400
Gross profit $ 66.61% 65.59% 65.57% 65.30%
Explanation:
a) Data and Calculations:
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Sales revenue $ 913,800 $ 923,300 $ 921,600 $ 929,400
Cost of goods sold 305,100 317,700 317,300 322,500
Gross profit $ 608,700 $ 605,600 $ 604,300 $ 606,900
Operating expenses 248,300 259,700 257,900 262,000 Interest expense 3,900 3,900 3,900 3,800
Income tax expense 84,900 87,800 87,800 90,300
Average number of common
shares outstanding 796,030 791,064 792,670 806,000
b) The Gross profit percentage of Mercedes, Co for each quarter is calculated as the gross profit divided by sales revenue, and then multiplied by 100. To obtain the gross profit, the cost of goods sold is deducted from the sales revenue. The gross profit represents a financial measure that shows the performance of management in controlling the cost of goods sold in comparison with the sales revenue. It is from the gross profit that operating expenses, interests, and taxes will be offset to arrive at the net income.
