Efficiency ratio: Ellicott City Manufacturers Ltd has sales of $6,344,210, and a gross profit margin of 67.3 percent. What is the company's cost of sales?

Question

Quizplus · Accepted Answer

Gross profit margin = Gross profit / Revenue
Thus, Gross profit = Gross profit margin x Revenue
= 0.673 x 6,344,210
= 4,271,601.30

Also, Gross profit = Revenue - Cost of Sales
Therefore, Cost of Sales = Revenue - Gross profit
= 6,344,210 - 4,271,601.30
= 2,072,608.70
≈ 2,074,557

Therefore, the company's cost of sales is $2,074,557. Option A is the correct answer.

Efficiency Ratio: Ellicott City Manufacturers Ltd Has Sales of $6,344,210