A venture has net sales of $400,000, cost of goods sold of $200,000, operating expenses (selling, general, and administrative)of $100,000, and interest expenses of $50,000. What is the operating profit margin?
A)50%
B)75%
C)25%
D)40%

Question

Quizplus · Accepted Answer

Operating profit margin is calculated as (Net Sales - Cost of Goods Sold - Operating Expenses) / Net Sales. Here, it's ($400,000 - $200,000 - $100,000) / $400,000 = $100,000 / $400,000 = 25%. However, the correct calculation for operating profit margin does not include interest expenses, so the correct calculation should be ($400,000 - $200,000 - $100,000) / $400,000 = 25%. My initial response was incorrect in stating the choice, the correct choice based on the calculation provided should be C) 25%.

A Venture Has Net Sales of $400,000, Cost of Goods