A company has sales of $1,500,000,sales discounts of $102,000,sales returns and allowances of $123,000,shipping charges of $15,000,sales commissions of $34,000,net income of $263,500,and cost of goods sold of $420,000.What is the gross profit/margin ratio?
A)72.0%
B)53.7%
C)67.1%
D)81.7%
E)17.6%

Question

Quizplus · Accepted Answer

Gross profit is calculated as sales minus sales discounts, sales returns and allowances, and cost of goods sold. The gross profit margin ratio is then gross profit divided by net sales. Here, net sales = $1,500,000 - $102,000 - $123,000 = $1,275,000. Gross profit = $1,275,000 - $420,000 = $855,000. Gross profit margin ratio = $855,000 / $1,275,000 = 67.1%.

A Company Has Sales of $1,500,000,sales Discounts of $102,000,sales Returns