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densk [106]
3 years ago
12

Smith company sold inventory that cost $5,000 for $9,000 cash. Freight cost was $600 paid in cash. The freight terms were FOB sh

ipping point. Based on this information,
a. net income would be $3,400.

b. gross margin would be $4,000.

c. gross margin would be $3,400.

d. None of the answers are correct.
Business
1 answer:
Mashutka [201]3 years ago
5 0

Answer:

b. gross margin would be $4,000.

Explanation:

Distribution costs are considered when calculating gross margin.

Gross margin is given by sales subtracted by the cost of goods sold:

GM = \$9,000-\$5,000=\$4,000

The gross margin would be $4,000.

Although the freight cost should be included when calculating net income, more administrative costs could be added and, thus, net income cannot be determined with the given information.

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Unsecured loans pose a higher risk to the lender because they are not backed by any collateral. For this reason, they attract a higher interest rate than secured loans.

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iragen [17]

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F?

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