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Pederson Company reported the​ following:

Manufacturing costs $2,080,000
Units manufactured 52,000
Units sold 40,000 units sold for $90 per unit
Beginning inventory 0 Units

What is the amount of gross profit​ margin?
A. $2,600,000
B. $2,000,000
C. $3,600,000
D. $5,200,000

1 Answer

4 votes

Final answer:

The amount of gross profit margin is $2,000,000.

Step-by-step explanation:

The gross profit margin can be calculated by subtracting the cost of goods sold from the net sales revenue and dividing the result by the net sales revenue. In this case, the net sales revenue can be calculated by multiplying the number of units sold by the selling price per unit. The cost of goods sold can be calculated by multiplying the number of units sold by the manufacturing cost per unit. Using the given information, the gross profit margin would be:

Units sold: 40,000

Selling price per unit: $90

Manufacturing cost per unit: $2,080,000/52,000 = $40

Net sales revenue: 40,000 units x $90 per unit = $3,600,000

Cost of goods sold: 40,000 units x $40 per unit = $1,600,000

Gross profit margin = (Net sales revenue - Cost of goods sold) / Net sales revenue = ($3,600,000 - $1,600,000) / $3,600,000 = $2,000,000

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