Celestial Navigation is a store for people who collect nautical items and use them to decorate their homes. Last year its net sales totalled $120,500. The value of the items it sold was $72,300. Taxes for the year ran $7,680. The only expenses that the operation has are (1) licenses for $300, (2) salaries to the owner and one part-time assistant for
$27,000, (3) administrative expenses of $500, and (4) utilities at $1,200. Calculate the net profit margin for Celestial Navigation.
A) 60.2 percent
B) 23.9 percent
C) 40 percent
D) 9.6 percent
E) Cannot be determined from the information provided

Question

Quizplus · Accepted Answer

Net profit margin is calculated as (Net Profit / Net Sales) * 100. Net Profit is calculated as Net Sales minus Cost of Goods Sold and all expenses. Here, Net Profit = $120,500 - $72,300 - $7,680 - $300 - $27,000 - $500 - $1,200 = $11,520. Net Profit Margin = ($11,520 / $120,500) * 100 = 9.6%.

Celestial Navigation Is a Store for People Who Collect Nautical