Multiple Choice
The amount of direct-labor hours that should be used to produce one unit of finished goods is the:
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4. Merchandising Operations
Net Sales
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Given the following information for XYZ Company: Net Sales = \$500,000, Cost of Goods Sold = \$350,000, calculate the gross margin ratio.
A
50%
B
70%
C
30%
D
40%
Verified step by step guidance1
Step 1: Understand the formula for Gross Margin Ratio. It is calculated as: Gross Margin Ratio = (Gross Margin / Net Sales) × 100.
Step 2: Calculate the Gross Margin. Gross Margin is determined by subtracting the Cost of Goods Sold (COGS) from Net Sales. Use the formula: Gross Margin = Net Sales - Cost of Goods Sold.
Step 3: Substitute the given values into the Gross Margin formula. Net Sales = \$500,000 and Cost of Goods Sold = \$350,000.
Step 4: Once the Gross Margin is calculated, substitute it into the Gross Margin Ratio formula along with the Net Sales value.
Step 5: Multiply the result by 100 to express the Gross Margin Ratio as a percentage.
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