The following information is available for Escalante Computer ...

[cagreen833]

The following information is available for Escalante Computer Company. Analyze the gross profit margin making any calculations deemed necessary.
 
  2015 2014 2013
   Product sales 2,700 2,400 1,960
   Service revenues 380 50 40
   Total sales 3,080 2,450 2,000
   Cost of products 2,100 1,750 1,450
   Cost of services 260 35 30
   Total cost of sales 2,360 1,785 1,480
   Gross profit  720  665  520
 
 
 What will be an ideal response?

Question 2

The amount of cash appearing on the November 30 balance sheet is the amount
 a. reported on the November 30 bank statement.
   b. shown as the adjusted balance on the bank reconciliation statement.
   c. of cash added to the book balance on the bank reconciliation.
   d. of cash deducted from the book balance on the book reconciliation.
   e. reported on the October 31 bank statement.

[chreslie]

Answer to Question 1

2015 2014 2013
Overall gross profit margin 23.4 27.1 26.0
Gross profit margin of:
Product sales 22.2 27.1 26.0
Service revenues 31.6 30.0 25.0

The gross profit margin of Escalante Computer Company has decreased significantly in 2015 . This is a result of product sales as service gross profit margins have been steadily increasing. Product sales make up the majority of the company's revenues although the service area appears to be expanding in 2015 . In 2013 and 2014 the overall gross profit margin was the same percentage as the product sales gross profit margin due to the minimal service revenues. The overall gross profit margin was slightly higher than the product gross profit margin because of the increased amount of service revenue. Escalante Company has either lowered selling prices on products and/or cost of goods sold has increased. A volume decrease in product sales could account for the lower gross profit margin if the firm has significant fixed costs in cost of goods sold. Service revenues appear to be increasing in volume, or the price charged has increased, or cost of goods sold has decreased.

Answer to Question 2

b