Question

Calculate the amount of gross margin given the following information:

Sales Revenues $150,000
Cost of Goods Sold $90,000
Sales Discounts $3,000
Selling Expenses $25,000
Sales Returns and Allowances $5,000
Administrative Expenses $15,000

Answer 1

To calculate the gross margin, subtract the cost of goods sold, direct selling expenses, sales discounts, sales returns and allowances, and administrative expenses from the sales revenue.

Step-by-step explanation:

To calculate the gross margin, you would need to subtract the cost of goods sold and any direct selling expenses from the sales revenue. Then, you would subtract any sales discounts, sales returns and allowances, and administrative expenses.

Using the information provided:

Sales Revenues = $150,000

Cost of Goods Sold = $90,000

Sales Discounts = $3,000

Selling Expenses = $25,000

Sales Returns and Allowances = $5,000

Administrative Expenses = $15,000

Therefore, the formula to calculate the gross margin would be:
Gross Margin = Sales Revenues - (Cost of Goods Sold + Sales Discounts + Selling Expenses + Sales Returns and Allowances + Administrative Expenses)

Gross Margin = $150,000 - ($90,000 + $3,000 + $25,000 + $5,000 + $15,000) = $12,000