Question

Ellicott City Manufacturers, Inc. reported net sales of $689,000, and a gross profit margin of 52% in 2020. What is the firm's cost of goods sold? (Round to the nearest dollar).

Answer 1

To calculate the cost of goods sold, we need to first calculate the gross profit. Then subtract the gross profit from net sales to find the cost of goods sold.

Step-by-step explanation:

To calculate the cost of goods sold, we need to first calculate the cost of goods sold percentage. The gross profit margin is equal to the gross profit divided by net sales, expressed as a percentage. In this case, the gross profit margin is 52%, which means the gross profit is 52% of net sales. We can calculate the gross profit by multiplying the net sales by the gross profit margin: $689,000 * 0.52 = $358,280.

The cost of goods sold is equal to the net sales minus the gross profit: $689,000 - $358,280 = $330,720. Therefore, the firm's cost of goods sold is $330,720.