If a company has sales of $420,000, net sales of $400,000, and cost of goods sold of $260,000, the gross profit rate is
A) 67%.
B) 65%
C) 35%.
D) 33%.

Question

Quizplus · Accepted Answer

Gross profit rate is calculated by subtracting cost of goods sold from net sales and dividing by net sales.

Gross profit rate = (Net sales - Cost of goods sold) / Net sales

Gross profit rate = ($400,000 - $260,000) / $400,000

Gross profit rate = $140,000 / $400,000

Gross profit rate = 0.35 or 35%

Therefore, the correct answer is C.

If a Company Has Sales of $420,000, Net Sales of $400,000