Financial information is presented below:
Operating expenses $ 42,000
Sales returns and allowances 12,000
Sales discounts 3,000
Sales revenue 165,000
Cost of goods sold 96,000
The gross profit rate would be
a. 64.
b. 42.
c. 36.
d. 37.
The correct answer and explanation is :
To calculate the gross profit rate, we follow these steps:
Step 1: Calculate Net Sales
Net Sales = Sales Revenue – Sales Returns and Allowances – Sales Discounts
Net Sales = $165,000 – $12,000 – $3,000 = $150,000
Step 2: Calculate Gross Profit
Gross Profit = Net Sales – Cost of Goods Sold
Gross Profit = $150,000 – $96,000 = $54,000
Step 3: Calculate Gross Profit Rate
Gross Profit Rate = (Gross Profit ÷ Net Sales) × 100
Gross Profit Rate = ($54,000 ÷ $150,000) × 100 = 36%