# Given below are account balances for Charlie Company: Gross sales $92,000 Sales returns and... ## Question: Given below are account balances for Charlie Company:  Gross sales$92,000 Sales returns and allowances $6,000 Selling expenses$12,000 Cost of goods sold $44,000 Interest expense$3,000

How much is the gross profit margin?

## Gross Profit Margin:

The gross profit margin is the ratio of the company's gross profit relative to its net sales revenue. The gross profit is the difference between the sales revenue and the cost of goods sold. It is the income generated by the company before meeting the operating and nonoperating expenses.

Charlie Company's gross profit margin is 48.84%.

Explanation:

As per the data provided by Charlie Company:

• Gross sales = $92,000 • Sales returns and allowances =$6,000
• Cost of goods sold = $44,000 Computation: The first step is to determine the net sales • Net sales = Gross sales - Sales returns and allowances • Net sales =$92,000 - $6,000 • Net sales =$86,000

The second step is to determine the gross profit margin:

• Gross profit margin = (Net sales - Cost of goods sold) / Net sales
• Gross profit margin = ($86,000 -$44,000) / \$86,000
• Gross profit margin = 48.84% 