During its first month of operations, Purrfect Pets purchased 5,100 bags of dog food at a cost of $7 a bag and sold all 5,100 bags of dog food on account with payment terms of 1/10, n/30 for $11 each. A total of 2,100 of these bags were sold to customers who paid within the discount period; the other customers paid after the discount period had ended. Sales allowances totaling $220 were granted to customers whose dogs did not like the dog food. Required: Calculate the gross profit for the month. Calculate the gross profit percentage for the month.

Purrfect Pets

The gross profit for the month is:

= $20,180.

The gross profit percentage for the month is:

= 36.11%.

Explanation:

a) Data and Calculations:

Quantity of dog food purchased = 5,100 bags

Cost per bag = $7

Quantity of dog food sold = 5,100 bags

Sales price per bag = $11

Sales revenue                               $56,100 ($5,100 * $11)

Less Sales allowances                        220

Net Sales                                      $55,880

Cost of goods (dog food) sold      35,700 (5,100 *$7)

Gross profit                                  $20,180

Discounts (2,100 * $11 * 1%)                231

Net operating income                $19,949

Gross profit percentage = Gross profit/Net Sales * 100

= $20,180/$55,880 * 100

= 36.11%

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.