Question

# Financial information for two companies are presented below. Fill in the missing amounts. Oriole Company Ivanhoe...

Financial information for two companies are presented below.

Fill in the missing amounts.

 Oriole Company Ivanhoe Company Sales revenue \$ 97,200 \$ Sales returns and allowances \$  4,000 Net sales 83,000 106,000 Cost of goods sold 54,800 Gross profit \$ 44,000 Operating expenses 14,700 Net income \$ 15,600

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

 Oriole Company Ivanhoe Company Profit margin % % Gross profit rate % %

Sales revenue - Sales returns and allowances = Net sales

Net sales - Cost of goods sold = Gross profit

Gross profit - Operating expenses = Net income

 Oriole Company Ivanhoe Company Sales revenue \$97,200 \$110,000 (\$4,000+\$106,000) Sales retuns and allownces \$14,200 (\$97,200-\$83,000) \$4,000 Net sales \$83,000 \$106,000 Cost of goods sold \$54,800 \$62,000 (\$106,000-\$44,000) Gross profit \$28,200 (\$83,000-\$54,800) \$44,000 Operating expenses \$14,700 \$28,400 (\$44,000-\$15,600) Net income \$13,500 (\$28,200-\$14,700) \$15,600

Profit Margin = Net income / Net sales

Gross profit rate = Gross profit / Net sales

 Oriole Company Ivanhoe Company Profit margin 16.3% (\$13,500/\$83,000) 14.7% (\$15,600/\$106,000) Gross profit rate 34% (\$28,200/\$83,000) 41.5% (\$44,000/\$106,000)