Question

24.
Sale of goods 3,000 for cash will increase the Gross Profit Ratio.' Is this
statement correct? Give reason in support of your answer.
1​

Answer 1

Answer:

the gross profit ratio as follows:

= (235,000* / 910,000**)

= 0.2582 or 25.82%

*Gross profit = Net sales – Cost of goods sold

= $910,000 – $675,000

= $235,000

**Net sales = Gross sales – Sales returns

= $1,000,000 – $90,000

= $910,000

The GP ratio is 25.82%. It means the company may reduce the selling price of its products by 25.82% without incurring any loss.

Step-by-step explanation:

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