Question

Local Co. has sales of

$ 10.6$10.6

million and cost of sales of

$ 5.6$5.6

million. Its​ selling, general and administrative expenses are  

$ 500 comma 000$500,000

and its research and development is

$ 1.5$1.5

million. It has annual depreciation charges of

$ 1.1$1.1

million and a tax rate of

35 %35%.

a. What is​ Local's gross​ margin?

b. What is​ Local's operating​ margin?

c. What is​ Local's net profit​ margin?

Answer 1

a. What is​ Local's gross​ margin = $ 5,000,000

b. What is​ Local's operating​ margin= $ 1,900,000

c. What is​ Local's net profit​ margin = $ 1,235,000

Note:

Sales	1,06,00,000
Less: Cost of Sales	56,00,000
Gross Margin	50,00,000
Less:  selling, general and administrative expense	5,00,000
Less: Research And Development	15,00,000
Less: Annual Depreciation	11,00,000
Operating Margin	19,00,000
less: tax @ 35%	6,65,000
Net Margin	12,35,000