Olly Company is a merchandising business that sells dog food. Based on the following information,...

Question:

Olly Company is a merchandising business that sells dog food. Based on the following information, what is the gross margin for Olly Company?

Sales Revenue: $581,300

Cash: 119,700

Accounts Receivable: 62,900

Inventory: 34,600

Cost of goods sold: 418,200

Operating expenses: 58,600

Gross Margin:

Gross margin is a line item found on the income statement. This figure is calculated by subtracting cost of goods sold from revenues. Gross margin is therefore equal to the funds available to pay for expenses other than cost of goods sold. Gross margin may be expressed in dollars or as a percentage.

Answer and Explanation:

Gross margin is calculated by subtracting cost of goods sold from total revenues.

Sales Revenue $581,300
Less: Cost of Goods Sold (418,200)
Gross Margin $163,100

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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