Question

In the Swifty Company, if sales were $761,000, sales returns and allowances were $26,000, and cost of goods sold was $588,000, what was the gross profit rate?"

a) 19.3%
b) 20.0%
c) 24.4%
d) 22.79%

Answer 1

The gross profit rate for the Swifty Company is 22.79%.

Step-by-step explanation:

In order to calculate the gross profit rate, we need to subtract the cost of goods sold (COGS) from the sales revenue and then divide the result by the sales revenue.

Sales revenue - COGS = Gross profit

Gross profit / Sales revenue = Gross profit rate

Using the given values,

Sales revenue = $761,000

COGS = $588,000

Gross profit = $761,000 - $588,000 = $173,000

Gross profit rate = $173,000 / $761,000 = 0.2279 or 22.79%

Therefore, the gross profit rate for the Swifty Company is 22.79%.