Gerry's Gyros had the following results last month: Sales revenues equal $4,000, direct costs of labor and food ingredients were $2,100, other cost of goods sold were $200, and fixed period expenses equal $700 per month. Which of the following statements is correct?
A) Gerry's gross margin is equal to $1,900.
B) Gerry's gross margin is equal to $1,700.
C) Gerry's operating income is equal to $1,700.
D) Gerry's degree of operating leverage is 4.25.

Question

Quizplus · Accepted Answer

The gross margin is equal to sales revenues minus all costs of goods sold. Therefore, total gross margin = $4,000 F1F1F1S1?F1F1F10 $2,100 F1F1F1S1?F1F1F10 $200 = $1,700.

Gerry's Gyros Had the Following Results Last Month: Sales Revenues