ACCA FA · Chapter 14 · Question 3 of 10
A company has revenue of $400,000 and cost of sales of $300,000. What is its gross profit margin?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) 25%
Explanation
Gross profit = $400,000 - $300,000 = $100,000. Gross profit margin = gross profit / revenue = $100,000 / $400,000 = 25%. The figure of 33.3% is the mark-up on cost ($100,000 / $300,000), a common confusion.
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