Problem - Profitability Analysis

Ashley Enterprises reports the following information on its income statement:

Net sales - $300,000

Administrative expenses - $20,000

Cost of goods sold - 170,000

Other income - 15,000

Selling expenses - 50,000

Other expense - 10,000

Required - Compute Ashley's gross profit percentage and return on sales ratio. Explain what each ratio tells us about Ashley's performance. Ashley is planning to add a new product and expects net sales to be $32,000 and cost of goods to be $26,000. No other income or expenses are expected to change. How will this affect Ashley's gross profit percentage and return on sales ratio? What do you advise regarding the new product offering?