Question

Candy Company had sales of $320,000 and cost of goods sold of $112,000. What is the gross profit margin (ratio of gross profit to sales)? 55% 65% 73.3% 35%\

Answer 1

The gross profit margin of Candy Company is 65% (second option)

Step-by-step explanation:

The gross profit margin is defined as:

Mg = (sales - costs) / price of sales

If for Candy Company the cost are $112,000 and sales $320,000 then the gross profit margin is:

Mg = ($320,000- $112,000) * 100% / $320,000 =

Mg = $208,000 * 100% / $320,000 = 0.65 * 100%

Mg = 0.65 * 100%

Mg = 65%