Net sales for the year were $1,250,000 and cost of goods sold was $925,000 for t

Question

Net sales for the year were $1,250,000 and cost of goods sold was $925,000 for the company’s existing products. A new product is presently under development and will have an expected selling price of not more than $72 per unit in order to remain competitive with similar products in the marketplace.

Net sales for the year were $1,250,000 and cost of goods sold was $925,000 for the company’s existing products. A new product is presently under development and will have an expected selling price of not more than $72 per unit in order to remain competitive with similar products in the marketplace.

Explanation / Answer

gross profit= net sales - cost of goods sold

gross profit = 1250000 - 925000 =325000

gross profit ratio = gross profit/ net sales

gross profit ratio = 325000 / 1250000 = 0.26

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