QUESTION 1 A liquor store reported the following: Net Sales.....................
ID: 2614957 • Letter: Q
Question
QUESTION 1
A liquor store reported the following:
Net Sales............................................ $575,000
Gross Margin..................................... $295,500
Operating Expenses................................... 38%
What is the “% for Net Profit/Net Loss” and “% for Cost of Goods Sold”? Round your final answers to one decimal place.
13.4% Net Profit; 48.6% Cost of Goods Sold
13.4% Net Loss; 48.6% Cost of Goods Sold
89.4% Net Loss; 51.4% Cost of Goods Sold
89.4% Net Proft; 51.4% Cost of Goods Sold
A.13.4% Net Profit; 48.6% Cost of Goods Sold
B.13.4% Net Loss; 48.6% Cost of Goods Sold
C.89.4% Net Loss; 51.4% Cost of Goods Sold
D.89.4% Net Proft; 51.4% Cost of Goods Sold
Explanation / Answer
Operating expenses=(0.38*575000)=$218500
Net profit=Gross margin-Operating expenses
=(2955000-218500)
=$77000
Hence net profit%=Net income/Net Sales
=(77000/575000)=13.4%(Approx)
Gross margin=Net Sales-COGS
Hence COGS=(575000-295500)=$279500
COGS%=COGS/Net Sales
=(279500/575000)=48.6%(Approx).
Hence the correct option is A.
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