Andy Company had gross sales of $35,500 and sales returns of $450. The cost of goods sold is 35% of gross sales. Gross profit percentage would be:
A) 35%.
B) 65%.
C) based on $35,050.
D) based on $35,950.

Question

Quizplus · Accepted Answer

CGross profit is calculated as sales minus the cost of goods sold (COGS). Here, the net sales are $35,500 (gross sales) - $450 (sales returns) = $35,050. The COGS is 35% of gross sales, which is 35% of $35,500 = $12,425. Therefore, the gross profit is $35,050 (net sales) - $12,425 (COGS) = $22,625. The gross profit percentage is the gross profit divided by net sales, which is $22,625 / $35,050 = 64.55%, which rounds to approximately 65%. The calculation is based on net sales after returns, which is $35,050.

Andy Company Had Gross Sales of $35,500 and Sales Returns