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Gross profit is $580,000 and sales are $994,000. What is the gross profit percentage (to one decimal)?
A24.9%
B41.6%
C58.4%
D63.1%
Answer & Solution
Correct answer: C. 58.4%
1. Gross profit percentage = gross profit / sales.
2. = $580,000 / $994,000.
3. = 0.584 = 58.4%.
4. Trap: 41.6% (option B) is the cost of merchandise sold percentage (cost / sales), not gross profit.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §7.3.4 "Gross Profit Percentage", p.309_
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