Final answer:
To calculate the Gross Profit Margin Ratio for Sunrise Motors, Net Sales are determined by subtracting sales returns and discounts from total sales, then Gross Profit is calculated by subtracting COGS from Net Sales. The ratio is found by dividing Gross Profit by Net Sales and multiplying by 100. The result is 32%, rounded to the nearest whole percentage, but the closest provided option is 30%, making answer choice (a) the best match.
Step-by-step explanation:
To calculate the Gross Profit Margin Ratio for Sunrise Motors, we start by determining the Net Sales, which involves subtracting both Sales Returns and Allowances and Sales Discounts from Total Sales. Therefore, Net Sales can be calculated as follows:
Net Sales = Sales - Sales Returns and Allowances - Sales Discounts
= $256,400 - $34,890 - $44,760
= $176,750
Next, we need to determine the Gross Profit by subtracting the Cost of Goods Sold (COGS) from the Net Sales:
Gross Profit = Net Sales - COGS
= $176,750 - $120,470
= $56,280
Finally, we obtain the Gross Profit Margin Ratio by dividing the Gross Profit by Net Sales and then multiplying by 100 to get a percentage:
Gross Profit Margin Ratio = (Gross Profit / Net Sales) × 100
= ($56,280 / $176,750) × 100
= 31.85%
Rounded to the nearest whole percentage, the Gross Profit Margin Ratio is 32%, which is not one of the options provided. If 32% were an option, it would be the correct answer. However, the closest provided option to 32% is 30%, answer choice (a).