Question

Consider each situation independently: a. What is the gross margin if sales are $130,000 and cost of goods sold is $85,000 ? b. If gross margin is $20,000 and cost of goods sold is $50,000, what was sales revenue? c. If sales are $44,500 and gross margin is $11,500, what was cost of goods sold? a. What is the gross margin if sales are $130,000 and cost of goods sold is $85,000 ? b. If gross margin is $20,000 and cost of goods sold is $50,000, what was sales revenue? c. If sales are $44,500 and gross margin is $11,500, what was cost of goods sold?

Answer 1

Gross margin is found by subtracting COGS from sales: a) $45,000, b) Sales revenue is calculated by adding gross margin to COGS: $70,000, and c) COGS is derived by subtracting gross margin from sales: $33,000.

Step-by-step explanation:

To answer each situation independently:

• a. The gross margin is calculated by subtracting the Cost of Goods Sold (COGS) from Sales. If sales are $130,000 and COGS is $85,000, then the gross margin would be:
  $130,000 - $85,000 = $45,000.
• b. If the gross margin is $20,000 and COGS is $50,000, to find sales revenue we add the gross margin to COGS:
  $20,000 + $50,000 = $70,000 in sales revenue.
• c. If sales are $44,500 and the gross margin is $11,500, to find COGS we subtract the gross margin from sales:
  $44,500 - $11,500 = $33,000 in COGS.

Each case provides a simple arithmetic challenge: to derive one financial measure from another provided certain data. Understanding the relationship between sales, gross margin, and the cost of goods sold is crucial for such calculations.