Question

During March, a music store had net sales of $270,000. The gross profit was $121,500 and the operating expenses were $108,000. As a percent of net sales, what was the gross profit margin? What was the net income for March? What was the net profit margin?

Answer 1

Answer:

Gross profit margin = 45%

Net income = $13,500

Net profit margin = 5%

Explanation:

Net sales = $270,000.

Gross profit = $121,500

Operating expenses = $108,000

Gross profit margin = (Gross profit ÷ net sales) × 100

Gross profit margin = $(121,500 ÷ 270,000) × 100

Gross profit margin = 0.45 × 100 = 45%

Net income for March :

Gross profit - Total expenses

$121,500 - $108,000 = $13,500

Net profit margin :

(Net profit ÷ net sales) × 100

(13500 ÷ 270,000) × 100

Net profit margin = 5%