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If sales are $300,000 and cost of goods sold is $180,000, what is the gross profit and gross...

Question:

If sales are $300,000 and cost of goods sold is $180,000, what is the gross profit and gross margin percentage?

Gross Profit:

The gross profit represents the difference between the sales revenue and the cost of goods sold and it is used to meet the operating expenses of the company. The excess of gross profit over the operating expenses results in the operating income. The gross profit margin is the ratio of the gross profit earned relative to the sales revenue.

Answer and Explanation:


Answer:

The gross profit is $120,000 and the gross margin percentage is 40%.

Explanation:

As per the data:

  • Sales = $300,000
  • Cost of goods sold = $180,000

Computation:

Gross profit:

  • Gross profit = Sales - Cost of goods sold
  • Gross profit = $300,000 - $180,000
  • Gross profit = $120,000

Gross profit margin:

  • Gross profit margin = Gross profit / Sales
  • Gross profit margin = $120,000 / $300,000
  • Gross profit margin = 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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