Question

A company had the following income statement for the previous reporting period (earnings before interest and taxes): Revenue $26,000,000 COGS $20,932409 SG&A $4,503,125 EBIT $564,466 The company is not at its maximum production and wants to make some additional sales this quarter to some new customers. Assuming that indirect costs have already been covered, choose the largest (temporary!) discount that could be offered without losing money. a) 0% b) 10% c) 15% d) 20% e) 25%

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Jayne

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70 Answers

Gross Profit Margin = (Revenue - COGS) / Revenue
Given the values:
Revenue = $26,000,000 COGS = $20,932,409
We can substitute these values into the formula:
Gross Profit Margin = ($26,000,000 - $20,932,409) / $26,000,000
This will give us the gross profit margin as a decimal.
To convert it to a percentage, we multiply by 100.
The answer is 20%

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