Question

Calculate the net profit margin for jeans

sold for $35 that have a $7 cost of goods
sold and 20% operating expenses.
A. 60%
C. 76%
B. $21
D. 300%

Answer 1

The correct answer is (a) 60%.

Explanation:

To calculate the net profit margin, we first need to calculate the net profit, which is the revenue minus the cost of goods sold (COGS) minus the operating expenses.

Revenue = $35

COGS = $7

Operating expenses = 20% of revenue = 0.2 x $35 = $7

Net profit = Revenue - COGS - Operating expenses

Net profit = $35 - $7 - $7 = $21

To calculate the net profit margin, we divide the net profit by the revenue and express it as a percentage:

Net profit margin = (Net profit / Revenue) x 100

Net profit margin = ($21 / $35) x 100

Net profit margin = 60%

Therefore, the correct answer is (a) 60%.