Final answer:
For each $100 of sales with a 25% gross-margin percentage, the retailer will generate $25 in gross-margin dollars.
Step-by-step explanation:
Gross margin is expressed as a percentage. In order to calculate it, first subtract the cost of goods sold from the company's revenue. This figure is known as the company's gross profit (as a dollar figure). Then divide that figure by the total revenue and multiply it by 100 to get the gross margin. If a retailer has a 25 percent gross-margin percentage, the gross-margin dollars generated for each $100 of sales would be $25. This calculation is derived by multiplying the gross margin percentage (in decimal form) by the total sales. For instance, calculating the gross margin in dollars from $100 of sales would be: $100 x 0.25 = $25.
To apply this to an example with larger figures, if the retailer's sales were $15 million, then the gross-margin dollars would be $15 million x 0.25 = $3.75 million. It is essential to convert percentage figures to decimals when performing these calculations (i.e., 25% becomes 0.25).