Calip Corporation, a merchandising company, reported the following results for October: Sales...

Question:

Calip Corporation, a merchandising company, reported the following results for October:

Sales $410,800

Cost of goods sold (all variable) $173,100

Total variable selling expense $17,500

Total fixed selling expense $14,600

Total variable administrative expense $8,000

Total fixed administrative expense $30,500

The gross margin for October is:

(a) $365,700

(b) $212,200

(c) $237,700

(d) $167,100

Gross Margin:

Every business functions with the intent to earn profits. A margin is set over the cost to earn the desired profits. Gross margin is calculated both in dollars and in percentage as a measure of the profitability of the company.

Answer and Explanation:


Answer choice: c. $237,700


Gross margin or gross profit margin = sales revenue - cost of goods sold

= $410,800 - $173,100 = $237,700

All other operating expenses are not deducted in calculating the gross margin.


Learn more about this topic:

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How to Calculate Gross Profit Margin: Definition & Formula

from Financial Accounting: Help and Review

Chapter 5 / Lesson 17
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