Question

Net sales for the year were $325,000 and cost of goods sold was $240,500 for the company’s existing products. A new product is presently under development and has an expected selling price of $40 per unit in order to remain competitive with similar products in the marketplace. The dollar amount of gross profit and the gross profit ratio for the year were:_______
a. $324,000 and 100%, respectively.
b. $84,500 and 26%, respectively.
c. $240,500 and 74%, respectively.
d. $83,500 and 74%, respectively.

Answer 1

Answer:

The correct answer is B.

Explanation:

Gross profit equals net sales minus cost of sales(Net sales- Cost of Sales).

Net sales = $325,000

Cost of Sales = $240,500

Therefore we have;

$325,000 - $240,500

=$84,500

Gross profit ratio is (Gross profit/net sales) x 100%

($84,500 x $325,000) x 100%

26%