Question

After analyzing your menu, you find that food sales are $1,200 and beverage sales are $800. Your average gross margin for food and beverage is 67%. Which is more profitable, food or beverage

Answer 1

C. Cant tell from the data

Step-by-step explanation:

Answer 2

Food is more profitable

Step-by-step explanation:

The formula for calculating the gross margin ratio is as below.

Gross margin ratio= gross profit/ net sales.

Therefore, gross profit= net sales x gross profit ratio

in this case:

The gross profit ratio is 67%

gross profits from food sales

=1200 x (67/100)

=$804

Gross profit from beverages

=$800 x ( 67 /100)

=$536

Gross profit from food sales is higher than that of beverages

Food is more profitable