Question

What is the gross profit margin for Charlie Company, given the following information?

Gross sales: $96,000
Sales returns and allowances: $8,000
Selling expenses: $12,000
Cost of goods sold: $40,000
Interest expense: $3,000
a) 25.00%
b) 32.29%
c) 42.71%
d) 48.96%

Answer 1

The gross profit margin for Charlie Company is 50%.

Step-by-step explanation:

The gross profit margin for Charlie Company can be calculated using the formula:

Gross Profit Margin = (Gross Sales - Sales Returns and Allowances - Cost of Goods Sold) / Gross Sales

Plugging in the given numbers:

Gross Profit Margin = ($96,000 - $8,000 - $40,000) / $96,000 = $48,000 / $96,000 = 0.5

Multiplying by 100% to convert it to a percentage: 0.5 * 100% = 50%

Therefore, the gross profit margin for Charlie Company is 50%.