Question

upton inc. income statement for years ended december 31, 2022 and 2021 2022 2021 sales $ 800 $ 900 less cost of goods sold 370 540 gross profit $ 430 $ 360 operating expenses: wage expense $ 95 $ 90 rent expense 35 30 misc expense 20 15 depreciation expense 25 20 total operating expense $ 175 $ 155 operating income $ 255 $ 205 less other expenses: interest expense 15 10 income before tax $ 240 $ 195 less income tax expense 110 85 net income $ 130 $ 110 if a common size income statement were prepared, what percentage would be attributable to the 2022 cost of goods sold of upton inc.? answer unselected 46.25% unselected 40.00% unselected 60.00% unselected 53.80%

Answer 1

The percentage of cost of goods sold (COGS) relative to sales for Upton Inc. in 2022 on a common size income statement is 46.25%. This is calculated by dividing the COGS by the total sales and then multiplying by 100%.

Step-by-step explanation:

To calculate the percentage of cost of goods sold (COGS) relative to sales on a common size income statement for Upton Inc. for the year ended December 31, 2022, we use the following formula:

Common size percentage for COGS = (COGS/Sales) × 100%

For the year 2022:

Common size percentage for COGS = ($370/$800) × 100% = 46.25%

Therefore, 46.25% would be attributable to the 2022 cost of goods sold of Upton Inc. on a common size income statement. This figure represents the proportion of each dollar of sales that is consumed by the cost of producing the goods.