Olivera Ltd provides the following data for the year 2016: $$\begin{array} { | l | l | }
\hline \text { Sales revenue } & \$ 629,000 \
\hline \text { Sales returns and allowances } & 20,000 \
\hline \text { Sales discounts } & 6000 \
\hline \text { Net sales revenue } & \$ 603,000 \
\hline \text { Cost of sales } & \$ 390,000 \
\hline
\end{array}$$ On a vertical analysis report,the gross profit as a percentage of net sales will be:
A)35.32%
B)33.86%
C)36.32%
D)64.68%

Question

Olivera Ltd provides the following data for the year 2016: $$\begin{array} { | l | l | } 
\hline \text { Sales revenue } & \$ 629,000 \
\hline \text { Sales returns and allowances } & 20,000 \
\hline \text { Sales discounts } & 6000 \
\hline \text { Net sales revenue } & \$ 603,000 \
\hline \text { Cost of sales } & \$ 390,000 \
\hline
\end{array}$$ On a vertical analysis report,the gross profit as a percentage of net sales will be:
A)35.32%
B)33.86%
C)36.32%
D)64.68%

Quizplus · Accepted Answer

Gross profit is calculated as Net Sales Revenue minus Cost of Sales. Gross profit percentage is then calculated as (Gross Profit / Net Sales Revenue) * 100. Here, Gross Profit = $603,000 - $390,000 = $213,000. Gross Profit Percentage = ($213,000 / $603,000) * 100 = 35.32%.

Olivera Ltd Provides the Following Data for the Year 2016