Question

Net sales for the year were $1,100,000 and cost of goods sold was $781,000 for the company�s existing products. A new product is presently under development and will have an expected selling price of not more than $69 per unit in order to remain competitive with similar products in the marketplace.

Required:

a.

Calculate gross profit and the gross profit ratio for the year.


Net Sales $1,100,000 ? %

Cost of Goods Sold $781,000 ? %

Gross Profits $319,000 29 %

Answer 1

Gross Profits $319,000 and percentage is 29 %

Step-by-step explanation:

The computations are shown below:

For gross profit:

= Net sales - cost of goods sold

= $1,100,000 - $781,000

= $319,000

And, the gross profit ratio would be

= (Gross margin ÷ net sales) × 100

= ($319,000 ÷ $1,100,000) × 100

= 29%

The gross margin is computed by deducting the cost of good sold from the net sales figure amount

And, the ratio is computed by considering the gross margin and net sales

All other information which is given is not relevant. Hence, ignored it