Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales. Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales. Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage. To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

On March 1, 20X1, your company,which uses Units-of-Production (UOP) Depreciation, purchases a machine for $300,000.

Please provide the accurate answer to this general accounting problem using valid techniques.

I am searching for the right answer to this financial accounting question using proper techniques.

Answer 2

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Answer 6

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.

Answer 7

Chapter 5, Problem 14QS

To determine

Concept Introduction:

Net Sales: Sales are the revenues earned by the company from its major operation. It is arrived after deducting sales returns if made by the customers from its gross sales.

Gross Profit: Gross Profit is the profit that is earned by the company after deducting cost of making the product from its sales.

Gross margin ratio: It is arrived by dividing the net sales from the gross profit and predicts the margin on net sales in percentage.

To Determine: The net sales, gross profit and the gross profit margin ratio and interpret the gross margin ratio results in case a.

Answer 8

Expert Solution & Answer

Explanation of Solution

S. No.	Net sales	Gross profit	Gross profit margin ratio
a	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 150, 000 - $ 5, 000 - $ 20, 000 \\ = $ 125, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 125, 000 - $ 79, 750 \\ = $ 45, 250 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 45, 250 \div $ 125, 000 \times 100 \\ = 36.20 % \end{array}$
b	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 550, 000 - $ 17, 500 - $ 6, 000 \\ = $ 526, 500 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 526, 500 - $ 329, 589 \\ = $ 196, 911 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 196, 911 \div $ 526, 500 \times 100 \\ = 37.40 % \end{array}$
c	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 38, 700 - $ 600 - $ 5, 100 \\ = $ 33, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 33, 000 - $ 24, 453 \\ = $ 8, 547 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 8, 547 \div $ 33, 000 \times 100 \\ = 25.90 % \end{array}$
d	$\begin{array}{l} = S a l e s - S a l e s d i s c o u n t s - \\ S a l e s r e t u r n s a n d a l l o w a n c e s \\ = $ 255, 700 - $ 4, 800 - $ 900 \\ = $ 250, 000 \end{array}$	$\begin{array}{l} = N e t s a l e s - C O G S \\ = $ 250, 000 - $ 126, 500 \\ = $ 123, 500 \end{array}$	$\begin{array}{l} = G r o s s p r o f i t \div N e t s a l e s \times 100 \\ = $ 123, 500 \div $ 250, 000 \times 100 \\ = 49.40 % \end{array}$

Interpretation of gross margin ratio of case a:

Gross margin ratio depicts how much earning is left over with the company after meeting the cost of goods sold. A higher ratio depicts the efficiency of the company in terms of its production cost. In case a, the company’s gross margin ratio is 36.20%. It shows that the company’s cost of goods sold in terms of sales percentage is 63.80%.