Question

A company has net sales of $829,000 and cost of goods sold of $549,500. Its net income is $99,000. What are the company's gross margin and operating expenses, respectively?

Answer 1

The company's gross margin is $279,500, and its operating expenses are $180,500.

Step-by-step explanation:

The company's gross margin can be calculated by subtracting the cost of goods sold (COGS) from net sales. In this case, the gross margin is $829,000 - $549,500 = $279,500. Operating expenses are determined by subtracting the net income from the gross margin.

Thus, the operating expenses are $279,500 - $99,000 = $180,500. The gross margin reflects the profitability of the core business activities, while operating expenses encompass various costs associated with running the business. Effective management of these components is essential for sustained financial health and profitability in the competitive business landscape.

To calculate the gross margin of the company, we subtract the cost of goods sold (COGS) from net sales. In this case, the gross margin is $829,000 (net sales) - $549,500 (COGS) = $279,500.

To find the operating expenses, we need to subtract the net income from the gross margin. Therefore, the operating expenses are $279,500 (gross margin) - $99,000 (net income) = $180,500.