If Island Coffee's net sales decreased from $90,000 in year 1 to $45,000 in year 2 and its cost of goods sold decreased from $30,000 in year 1 to $20,000 in year 2,the vertical analysis based on sales would show the following for cost of goods sold for the two periods (rounded to nearest tenth of a percent):
A)33.3% and 44.4%.
B)44.4% and 33.3%.
C)300% and 225%.
D)225% and 300%.

Question

Quizplus · Accepted Answer

In vertical analysis, cost of goods sold as a percentage of net sales is calculated. For year 1: ($30,000 / $90,000) * 100 = 33.3%. For year 2: ($20,000 / $45,000) * 100 = 44.4%.

If Island Coffee's Net Sales Decreased from $90,000 in Year