Given the following information extracted from the income statement of Widget Company (Widget Company has no depreciation expense or opening or closing inventory),

The gross profit margin (GPM)and operating margin (OM)for Widget Company are:
A)GPM = 26.67%; OM = 17.78%
B)GPM = 17.78%; OM = 26.67%
C)GPM = 53.33%; OM = 14.44%
D)GPM = 14.44%; OM = 53.33%

Question

Given the following information extracted from the income statement of Widget Company (Widget Company has no depreciation expense or opening or closing inventory),

The gross profit margin (GPM)and operating margin (OM)for Widget Company are:
A)GPM = 26.67%; OM = 17.78% 
B)GPM = 17.78%; OM = 26.67% 
C)GPM = 53.33%; OM = 14.44% 
D)GPM = 14.44%; OM = 53.33%

Quizplus · Accepted Answer

Gross profit margin = Gross profit / Revenue
= ($12,000 / $45,000) x 100%
= 26.67%

Operating margin = Operating profit / Revenue
= ($8,000 / $45,000) x 100%
= 17.78%

Given the Following Information Extracted from the Income Statement of Widget