One of the few companies to ever report the extent of sales discounts and returns was sun- glass maker Oakley, Inc. Assume that in the Management Discussion and Analysis section of its 2014 annual report, Oakley reported the following information about its Sales Discounts and Returns.

Required
1. For each year, calculate the percentage of sales discounts and returns by dividing Sales Discounts and Returns by Gross Sales and multiplying by 100. Based on these percent- ages, explain whether Sales Discounts and Returns had a greater impact in 2014 or 2013.
2. For each year, calculate the gross profit percentage using the formula shown in this chapter (i.e., using net sales). Did Oakley's gross profit improve or worsen in 2014, as compared to 2013?

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Year Ended December 31, (in thousands) Gross Sales Sales Discounts and Returns Net Sales Cost of Goods Sold Gross Profit 2014 2013 $693,342 $621,652 (36,184) 585,468 (45,211) 648,131 277,230 $370,901 262,483 $322,985