Question

Bridgeport Corp. reported net sales of $256,800, cost of goods sold of $122,300, operating expenses of $48,000, net income of $41,800, beginning total assets of $493,100, and ending total assets of $591,900. Calculate profit margin and gross profit rate. (Round answers to 1 decimal place, e.g. 10.5%.)
Profit margin enter percentages rounded to 1 decimal place %.
Gross profit rate enter percentages rounded to 1 decimal place %.

Answer 1

Answer:

The answers are:

A) Net profit margin rate = 16.3%

B) Gross profit margin rate = 52.4%

Explanation:

A) Net profit margin rate can be calculated using the following equation:

• Net profit margin rate = (net income / net sales) x 100

Net profit margin rate = ($41,800 / $256,800) x 100

Net profit margin rate = 16.3%

B) Gross profit margin rate can be calculated using the following equation:

• Gross profit margin rate = [(net sales - COGS) / net sales] x 100

Gross profit margin rate = [($256,800 - $122,300) / $256,800] x 100

Gross profit margin rate = 52.4%