The Millard Division's operating data for the past two years are provided below: Millard Division's margin in Year 2 was 150% of the margin in Year 1.The sales for Year 2 were:
A) $1,200,000
B) $3,200,000
C) $3,000,000
D) $3,333,333

Question

The Millard Division's operating data for the past two years are provided below:  Millard Division's margin in Year 2 was 150% of the margin in Year 1.The sales for Year 2 were:
A) $1,200,000 
B) $3,200,000 
C) $3,000,000 
D) $3,333,333

Quizplus · Accepted Answer

To find the sales for Year 2, we need to first find the margin for Year 1. Margin is given by the formula: 
Margin = (Sales - Cost of goods sold)/Sales

In Year 1, the margin was 10%. Using the formula, we can find the sales for Year 1: 
0.10 = (Sales1 - 2,000,000)/Sales1 
Sales1 = $2,222,222

Next, we know that the margin in Year 2 was 150% of the margin in Year 1. Therefore, the margin in Year 2 was: 
0.10 x 1.5 = 0.15

Using the formula again, we can find the sales for Year 2: 
0.15 = (Sales2 - X)/Sales2 
where X is the sales in Year 1. 
Solving for Sales2: 
Sales2 = $3,000,000

Therefore, the best choice is C.

The Millard Division's Operating Data for the Past Two Years