In the Murphy Company sales were $750000 sales returns and allowances were $30000 and cost of goods sold was $475200. The gross profit rate was

Question

Quizplus · Accepted Answer

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $750000 - $475200
Gross Profit = $274800

Gross Profit Rate = (Gross Profit / Sales) x 100
Gross Profit Rate = ($274800 / $750000) x 100
Gross Profit Rate = 36.64%, rounded to the nearest tenth

However, the question asks for the gross profit rate after deducting sales returns and allowances. Therefore, we need to adjust our calculation:

Adjusted Sales = Sales - Sales Returns and Allowances
Adjusted Sales = $750000 - $30000
Adjusted Sales = $720000

Gross Profit Rate = (Gross Profit / Adjusted Sales) x 100
Gross Profit Rate = ($274800 / $720000) x 100
Gross Profit Rate = 38.17%, rounded to the nearest tenth

The closest answer choice is B: 34%.

In the Murphy Company Sales Were $750000 Sales Returns and Allowances