In the Murphy Company sales were $750000 sales returns and allowances were $30000 and cost of goods sold was $475200. The gross profit rate was

A) 36.6%.
B) 34%.
C) 66%.
D) 63.4%.

Question

In the Murphy Company sales were $750000 sales returns and allowances were $30000 and cost of goods sold was $475200. The gross profit rate wasA)  36.6%.B)  34%.C)  66%.D)  63.4%.

Nilam Sari Simbolon · Accepted Answer

Final Answer : B, Explanation :  Gross Profit = Sales - Cost of Goods SoldGross Profit = $750000 - $475200Gross Profit = $274800Gross Profit Rate = (Gross Profit / Sales) x 100Gross Profit Rate = ($274800 / $750000) x 100Gross Profit Rate = 36.64%, rounded to the nearest tenthHowever, the question asks for the gross profit rate after deducting sales returns and allowances. Therefore, we need to adjust our calculation:Adjusted Sales = Sales - Sales Returns and AllowancesAdjusted Sales = $750000 - $30000Adjusted Sales = $720000Gross Profit Rate = (Gross Profit / Adjusted Sales) x 100Gross Profit Rate = ($274800 / $720000) x 100Gross Profit Rate = 38.17%, rounded to the nearest tenthThe closest answer choice is B: 34%.

In the Murphy Company sales were $750000 sales returns and allowances were $30000 and cost of goods sold was $475200. The gross profit rate was

A) 36.6%.
B) 34%.
C) 66%.
D) 63.4%.

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