Question

celestial navigation is a store for people who collect nautical items and use them to decorate their homes. last year its net sales totalled $120,500. the value of the items it sold was $72,300. taxes for the year ran $7,680. the only expenses that the operation has are (1) licenses for $300, (2) salaries to the owner and one part-time assistant for $27,000, (3) administrative expenses of $500, and (4) utilities at $1,200. calculate the net profit margin for celestial navigation. question 5 options: 9.6 percent 24.7 percent 40 percent cannot be determined from the information provided

Answer 1

To determine the net profit margin, subtract total expenses from net sales to find the net profit. Then divide the net profit by the net sales and multiply by 100. The net profit margin for Celestial Navigation is approximately 9.6 percent.

Step-by-step explanation:

The net profit margin for Celestial Navigation, a store selling nautical items for home decoration, is calculated by subtracting all costs and expenses from the net sales and then dividing that number by the net sales. To calculate it, we start by adding up all the expenses: the cost of items sold ($72,300), taxes ($7,680), licenses ($300), salaries ($27,000), administrative expenses ($500), and utilities ($1,200). The total expenses amount to $108,980. We then subtract this sum from the net sales of $120,500 to get the net profit, which is $11,520. Finally, to find the net profit margin, we divide the net profit by the net sales and convert that to a percentage.

Net Profit Margin = (Net Profit / Net Sales) x 100 = ($11,520 / $120,500) x 100 ≈ 9.6 percent.