A company has net sales of $825,000 and cost of goods sold of $547,000. Its net income is $98,500. The company's gross margin and operating expenses, respectively, are:
A) $179,500 and $98,500
B) $645,500 and $179,500
C) $209,000 and $191,470
D) $278,000 and $98,500
E) $278,000 and $179,500

Question

Quizplus · Accepted Answer

Gross margin = net sales - cost of goods sold
Gross margin = $825,000 - $547,000
Gross margin = $278,000

Operating expenses = net income - gross margin
Operating expenses = $98,500 - $278,000
Operating expenses = $-179,500 (negative result indicates that the company has operating losses, not operating expenses)

Therefore, the answer is E. Gross margin is $278,000 and operating expenses are $179,500.

A Company Has Net Sales of $825,000 and Cost of Goods