Question

	Sunland Company	Blossom Company
Sales Revenue	$97,400	??
Sales returns and allowances	??	$6,000
Net sales	81,600	129,000
Cost of goods sold	54,000	??
Gross Profit	??	48,000
Operating expenses	14,660	??
Net Income	??	16,000

Financial informantion for two companies presented below: Fill in the missing amounts.

Calculate the profit margin and the gross profit rate for each company. (Round answers to 1 decimal place, e.g.15.5%)

	Sunland Company	Blossom Company
Profit Margin	?? %	?? %
Gross profit rate	?? %	?? %

Answer 1

	Sunland Company	Blossom Company
Profit Margin   (1)	15.86%	12.40%
Gross Profit Rate (2)	33.82%	37.21%
(1) Profit margin = Net Income / Net Sales
(2) Gross profit rate = Gross Profit / Net Sales

Workings:

	Sunland Company	Blossom Company
Sales Revenue *	97400	1,35,000
Sales returns and allowances *	15,800	6000
Net sales	81,600	1,29,000
Cost of goods sold **	54,000	81,000
Gross Profit **	27,600	48,000
Operating expenses	14,660	32000
Net Income ***	12,940	16,000
* Net Sales = Sales Revenue - Sales Returns and allowances
** Gross Profit = Net sales - Cost of goods sold
*** Net Income = Gross profit - Operating expenses