The following financial statement items are shown for J&T Manufacturing. Calculate the common-size percentage for Gross Margin.
A)0.8%
B)11.6%
C)42.8%
D)57.1%

Question

The following financial statement items are shown for J&T Manufacturing.  Calculate the common-size percentage for Gross Margin.
A)0.8% 
B)11.6% 
C)42.8% 
D)57.1%

Quizplus · Accepted Answer

To calculate the common-size percentage for Gross Margin, we need to divide the Gross Margin by Net Sales and multiply it by 100.

Gross Margin = Net Sales - Cost of Goods Sold 
Gross Margin = $580,000 - $250,000 = $330,000

Common-Size Percentage for Gross Margin = (Gross Margin / Net Sales) x 100 
Common-Size Percentage for Gross Margin = ($330,000 / $580,000) x 100 
Common-Size Percentage for Gross Margin = 56.89% or 57.1% (rounded to one decimal place)

Therefore, the best choice is D) 57.1%.

The Following Financial Statement Items Are Shown for J&T Manufacturing