Companies may express their gross profit as a percentage of net sales or as a percentage of cost of goods sold.The following data are available on two different companies:
$\begin{array}{llr}
\text {Company A gross profit as a percentage of net sales } &20\%\
\text { Company B gross profit as a percentage of cost of goods sold. } &75\%\
\end{array}$
Required:
a. Compute the gross profit as a percentage of cost of goods sold for Company A.
b. Compute the gross profit as a percentage of net sales for Company B.

Question

Companies may express their gross profit as a percentage of net sales or as a percentage of cost of goods sold.The following data are available on two different companies:
 $\begin{array}{llr}
  \text {Company A gross profit as a percentage of net sales  } &20\%\
 \text { Company B gross profit as a percentage of cost of goods sold. } &75\%\
\end{array}$
 Required:
 a. Compute the gross profit as a percentage of cost of goods sold for Company A.
b. Compute the gross profit as a percentage of net sales for Company B.

Quizplus · Accepted Answer

The Answer of Companies may express their gross profit as a percentage of net sales or as a percentage of cost of goods sold.The following data are available on two different companies:
 $\begin{array}{llr}
  \text {Company A gross profit as a percentage of net sales  } &20\%\
 \text { Company B gross profit as a percentage of cost of goods sold. } &75\%\
\end{array}$
 Required:
 a. Compute the gross profit as a percentage of cost of goods sold for Company A.
b. Compute the gross profit as a percentage of net sales for Company B.

Companies May Express Their Gross Profit as a Percentage of Net