PJ Corp. reported the following income statement results: Sales $987,400 Sales returns &...

Question:

PJ Corp. reported the following income statement results:

Sales$987,400
Sales returns & allowances$7,400
Gross profit$378,280
Operating expense$264,500
Gain on sale of equipment$30,000
Net income$99,960

Calculate the gross profit margin.

Gross Profit Margin:

The gross profit of a company can be calculated in terms of ratio or dollar value. A higher gross margin allows a company to spend more on sales and promotional expenses which ultimately increase the profits.

Answer and Explanation: 1

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The calculation for gross profit margin is 38.31%.

The calculation is shown below.

Net sales = Sales - Sales return & allowances

Net sales =...

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How to Calculate Gross Profit Margin: Definition & Formula

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Chapter 5 / Lesson 17
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Learn how gross profit is calculated. Explore how to calculate gross profit margin, the definition of revenue, and the difference between gross and net profit.


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