The following quarterly information is given for Raybon for the year ended Year 2 (amounts shown are in millions):

Required

a. Divide the class into groups and organize the groups into four sections. Assign each section financial information for one of the quarters.

(1) Each group should compute the cost of goods sold and operating expenses for the specific quarter assigned to its section and prepare a multistep income statement for the quarter.

(2) Each group should compute the gross margin percentage and cost of goods sold percentage for its specific quarter.

(3) Have a representative of each group put that quarter’s sales, cost of goods sold percentage, and gross margin percentage on the board.

Class Discussion

b. Have the class discuss the change in each of these items from quarter to quarter and explain why the change might have occurred. Which was the best quarter and why?

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First Quarter Second Quarter Third Quarter Fourth Quarter Net Sales Gross Margin $736.0 $815.2 $620.1 252.3 $717.4 461.9 440.3 525.3 Net Income 37.1 24.6 38.6 31.4