Question

3. You are the buyer for a large retail chain. You need to calculate your gross margin. You have the following information available: Purchases at retail Purchases at cost Markdowns Employee discounts Freight Shortage Cash discounts Sales Alterations Senior citizen discount $546,843 324,756 151,324 33,456 4,521 1,346 5,678 359,818 342 899 What is the total gross margin? 4. Repeat exercise three; however, calculate the gross margin using percentages.

Answer 1

Gross margin = ( Total Revenue - Cost of Goods Sold ) / Total revenue.

Gross margin in % = ( Total Revenue - Cost of Goods Sold ) / Total revenue * 100.

Gross profit margin means the income of the company remaining after paying all the direct expenses related to the manufacturing of a good or service.

Direct expense means, its an expense that a business incurs that are directly attributable with the cost object. it may be any item for which costs are measured.( any product or service)

so, total revenue - Direct expenses.

Direct expenses,

Purchase at cost $324756,

Freight $4521

Total $329277.

Remaining all the expenses can be treated as indirect expense.

To complete the answer closing stock also required,

so, Total Sales+Closing stock - ( direct expense including purchase )

Hope you got the idea regarding the question,

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