Question

Company ABC reported the following: 1. Net Income: $110,000 2. Return on Sales (Net Income/Sales): 3.56% 3. Gross Profit Percentage (Gross Profit/Sales): 26.66% What is the dollar amount of Cost of Goods Sold this company incurred?

Answer 1

Answer:

$2,266,123.60

Explanation:

As it is given

Return on sales = Net income ÷ Sales

3.56% = $110,000 ÷ Sales

So, the sales is  $3,089,887.64

Now the Gross Profit percentage is

Gross Profit percentage = Gross profit ÷ Sales

26.66% = Gross profit ÷ $3,089,887.64

So, the gross profit

= $823,764.044

Now the cost of goods sold is

= Sales - gross profit

=  $3,089,887.64 - $823,764.044

= $2,266,123.60