ACCTN101-25A (HAM) - Accounting for Management Course Materials & Test Answers | elearn.waikato.ac.nz

Use the information given in the diagram. Under the vertical analysis for PC Hardware Limited, which one of the following statements is true?

PC Hardware Limited
Income Statement for the year ended	20X1 ($)	20X2 ($)
Sales	56,000	67,000
Less Cost of Goods Sold	36,000	41,000
Gross Profit	20,000	26,000
Less Expenses	12,000	14,000
Net Profit before Interest and Tax	8,000	12,000
Less Interest	2,000	3,000
Net Profit before Tax	6,000	9,000
Less Tax	2,000	3,000
Net Profit after Tax	4,000	6,000

Cost of goods sold as a percentage of sales has decreased in 20X2 thereby increasing the gross profit as a percentage of sales.

100%

Cost of goods sold as a percentage of sales has decreased in 20X2 thereby decreasing the gross profit as a percentage of sales

Cost of goods sold as a percentage of sales has increased in 20X2 thereby decreasing the gross profit as a percentage of sales

Cost of goods sold as a percentage of sales has increased in 20X2 thereby increasing the gross profit as a percentage of sales

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PC Hardware Limited
Income Statement for the year ended	20X1 ($)	20X2 ($)
Sales	56,000	67,000
Less Cost of Goods Sold	36,000	41,000
Gross Profit	20,000	26,000
Less Expenses	12,000	14,000
Net Profit before Interest and Tax	8,000	12,000
Less Interest	2,000	3,000
Net Profit before Tax	6,000	9,000
Less Tax	2,000	3,000
Net Profit after Tax	4,000	6,000