Question

Compute the missing amounts.

King Company Queen Company
Sales Revenue 56000 ?
Sales Returns and Allowances ? 5000
Net Sales 50000 ?
COGS 33000 80000
Gross Profit ? 32000
Operating Expenses 12000 ?
Net Income ? 14000

Required:
Calculate the profit margin and the gross profit rate for each company. (Round answers to 2 decimal places, e.g. 15.25.)

a. King Company;
b. Profit Margin %
c. Gross Profit Rate %
d. Queen Company;
e. Profit Margin %
f. Gross Profit Rate %

Answer 1

King Company Queen Company

Sales Revenue $56,000 $117,000

(112000+5000)

Sales Returns & Allowance $6,000 $5,000

(56000-50000)

Net Sales $50,000 $112,000

COGS $33,000 $80,000

Gross Profit $17,000 $32,000

(50000-33000)

Operating Expenses $12,000 $18,000

Net Income $5,000 $14,000

Profit Margin % = [Net Income / Net Sales]

King Company = 5,000/ 50,000* 100 = 10.00%

Queen Company = 14,000 / 112,000 * 100 = 12.50%

Gross Profit Rate % = [Gross Profit / Net Sales]

King Company = 17,000 / 60,000 = 34.00%

Queen Company = 32,000 / 112,000 = 28.57%