Question

GPM = 55%, net sales $405,000, NPM 20%, inventory loss $12,000. Calculate the value of other expenses:

A. $175,500
B. $222,750
C. $324,000
D. $283,500

Answer 1

To calculate other expenses, we use the provided Gross Profit Margin, Net Profit Margin, and inventory loss figures. However, after calculating, the result does not match any of the provided answer choices, pointing to a discrepancy.

Step-by-step explanation:

The question is asking us to calculate the value of other expenses, given the Gross Profit Margin (GPM), net sales, Net Profit Margin (NPM), and inventory loss. To find the other expenses, we need to follow these steps:

• Calculate Gross Profit (GP) by multiplying the Gross Profit Margin with the net sales. GP = 0.55 * $405,000 = $222,750.
• Determine the Net Profit (NP) by multiplying the Net Profit Margin with the net sales. NP = 0.20 * $405,000 = $81,000.
• Other expenses include all expenses except for COGS (Cost of Goods Sold), which has been taken into account in GP. Thus, other expenses can be calculated as follows: GP - NP - Inventory Loss = Other Expenses. So, $222,750 - $81,000 - $12,000 = $129,750. None of the options match this value, suggesting a possible error in the provided options or the question's parameters.