Accessories department reported the following: Cost of Goods Sold.. $245,000 Gross Margin.. 46% Net Profit.. 3%...

Accessories department reported the following: Cost of Goods Sold.. $245,000 Gross Margin.. 46% Net Profit.. 3% What is the “$ Net Sales” and “$ Operating Expenses”?

A. $453,704 Net Sales; $195,093 Operating Expenses

B. $36,296 Net Sales; $208,704 Operating Expenses

C. $403,797 Net Sales; $208,704 Operating Expenses

D. $13,611 Net Sales; $195,093 Operating Expenses

Solutions

Expert Solution

CALCULATION OF THE NET SALES
Cost of Goods Sold =	$ 2,45,000
Gross Margin =	46%
It means Cost of Goods sold = 100% - 46% =	54%

Sales = (Cost of Goods Sold / 54 ) X 100
Sales = ($ 245,000 / 54 ) X 100
Sales = $ 453,704


CALCULATION OF THE OPERATING EXPENSES

Net profit = 3% = $ 453,704 X 3% =	$ 13,611

Sales =	$ 4,53,704
Less: Cost of Goods Sold	$ 2,45,000
Gross Margin	$ 2,08,704
Less: Net profit =	$ 13,611
Operating Expenses	$ 1,95,093


Answer = Option A = $ 453,704 Net Sales ; $ 195,093 Operating Expenses

jeff jeffy answered 2 years ago

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