Question

Johnson Corporation sells primarily two products:
(A) Consumer cleaners and
(B) Industrial purifiers. Its gross margin and components for the past two years are as follows:


In Year 6, the selling price of A is $5 per unit, while in Year 7 it is $6 per unit. Product B sells for $50 per unit in both years. Security analysts and the business press expressed surprise at Johnson’s 12.5% increase in sales and $4,500 decrease in gross margin for Year 7.

Required:
Prepare an analysis statement of the change in gross margin for Year 7 versus Year 6. Discuss and show the effects of changes in quantities, prices, costs, and product mix on grossmargin.


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  • CreatedJanuary 22, 2015
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