Accounting Question

Question

Durbin Corporation reported net sales of $259,800, cost of goods sold of $121,800, operating expenses of $46,950, net income of $32,140, beginning total assets of $511,400, and ending total assets of $638,700.

Calculate profit margin and gross profit rate. (Round answers to 0 decimal places, e.g. 10%.)

Answer 1

(1) profit margin = Net income/Net sales

For given net income of $32,140, the profit margin is 12%

 

Caution:

Given net income is too low for the given sales, cost of goods, and operating expenses data. From these data the net income will be net sales - cogs - op.Exp. Accordingly, net income will be $91,050 and profit margin, now, will be 35%

 

(2) gross profit = net sales - cost of goods sold = $138,000

gross profit rate = gross profit / net sales = 53%