If Indiana Ink, Inc. has net sales of $400,000 and cost of goods sold of $300,000, Indiana Ink's gross profit rate is
A) 75%.
B) 33%
C) 25%.
D) 100%.

Name: If Indiana Ink, Inc. has net sales of $400,000 and cost of goods sold of $300,000, Indiana Ink's gross profit rate is A) 75%. B) 33% C) 25%. D) 100%.
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Question

Quizplus · Accepted Answer

Gross profit rate is calculated as (Net Sales - Cost of Goods Sold) / Net Sales. Here, it is ($400,000 - $300,000) / $400,000 = $100,000 / $400,000 = 0.25 or 25%.