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Financial information is presented here for two companies. Fill the missing amounts. Calculate...

Question:

Financial information is presented here for two companies.

Fill the missing amounts.

Yanik Company Nunez Company
Sales revenue $90,000 $
Sales returns and allowances $5,000
Net sales 84,000 100,000
Cost of goods sold 58,000
Gross profit $ 40,000
Operating expenses 14,380
Net income $ 17,000

Calculate the margin and the gross profit rate for the each company. Round answer to 0 decimal place.

Yanik Nunez
Profit margin % %
Gross profit rate % %

Gross Profit Margin:

The gross profit margin is an indicator of how much a company has marked up its products for sale and what is left to pay operating expenses. It is calculated by dividing gross margin (sales less cost of goods sold) by net sales.

Answer and Explanation:

The following equations are used to fill in the tables:

  • Sales Revenue less Sales Returns and Allowances = Net Sales
  • Net Sales less Cost of Good Sold = Gross Profit
  • Gross Profit less Operating Expenses = Net Income
  • Net Income divided by Net Sales = Profit Margin (%)
  • Gross Profit divided by Net Sales = Gross Profit Margin (%)

See completed tables below:

Yanik Company Nunez Company
Sales revenue $90,000 $105,000
Sales returns and allowances 6,000 5,000
Net sales $84,000 $100,000
Cost of goods sold 58,000 60,000
Gross profit $26,000 $40,000
Operating expenses 14,380 23,000
Net income $11,620 $17,000

Yanik Nunez
Profit margin 14% 17%
Gross profit margin 31% 40%


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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