Question

Fill in the missing amounts. Windsor, Inc. Sheridan Company Sales revenue $82,000 $______ Sales returns and allowances 6000 4,200 Net sales 76,000 92,000 Cost of goods sold 52,440 ______ Gross profit 23560 33,120 Operating expenses 13,680 ______Net income enter a total net income 12,880
Calculate the profit margin and the gross profit rate for each company.

Answer 1

Answer:

                                             Windsor, Inc.        Sheridan Company

Sales revenue                           $82,000                  $96,200

Sales returns and allowances  $6000                     $4,200

Net sales                                    $76,000                  $92,000

Cost of goods sold                    $52,440                  $58,880

Gross profit                                $23,560                   $33,120

Operating expenses                 $13,680                   $20,240

Net income                                $9,880                    $12,880

Profit Margin                                  13%                           14%

Gross Profit Rate                           31%                           36%

Explanation:

As we Know:

Windsor, Inc.

Net Income = Gross profit - Operating Expenses = $23,560 - $13,680 = $9,880

Profit Margin =  ( Net Profit / Net Sales ) x 100 = ( $9,880 / $76,000 ) x 100 = 13%

Gross Profit rate =  ( Gross profit / Net Sales ) x 100 = ( $23,560 / $76,000 ) x 100 = 31%

Sheridan Company

Net Sales = Gross Sales - Sales returns and allowances

$92000 = Gross Sales - $4,200

Gross Sales = $92,000 + $4,200 = $96,200

Gross profit = Net sales - Cost of Goods Sold

$33,120 = $92,000 - COGS

COGS = $92,000 - $33,120

COGS = $58,880

Net income = Gross profit - Operating Expenses

$12,880 = 33,120 - Operating Expenses

Operating Expenses = $12,880 - $33,120 = $20,240

Profit Margin =  ( Net Profit / Net Sales ) x 100 = ( $12,880 / $92,000 ) x 100 = 14%

Gross Profit rate =  ( Gross profit / Net Sales ) x 100 = ( $33,120 / $92,000 ) x 100 = 36%