Alpha is popular loungewear that prides itself on its versatility. Last year, its net sales were $1,750,000 with cost of goods of $390,000. The company's operating expenses totaled $960,000. Calculate the company's net operating profit margin percentage.
A) 77.1 percent
B) 22.2 percent
C) 22.9 percent
D) 12.5 percent
E) 19.3 percent

Question

Quizplus · Accepted Answer

Gross Margin = Net Sales ? Cost of goods sold = $1,750,000 ? $390,000 = $1,360,000.
Gross Margin - Operating Expenses = $1,360,000 ? $960,000 = $400,000 Net Operating Profit
Net Operating Profit/Net Sales = Net Operating Profit Margin
$400,000 / $1,750,000 = 22.9% (.2285 rounds to 22.9%)

Alpha Is Popular Loungewear That Prides Itself on Its Versatility