DynaTrue Industries reported net sales totaling $3,200,000 during the year. The

Question

DynaTrue Industries reported net sales totaling $3,200,000 during the year. The company's groass profit rate was determined to be 41%. Which statement is true? a. the company generated $1,312,000 of net income during the year. b. the company generated 41 cents of net income out of each dollar of assests owned by the company. c. the company generated 41 cents our of every sales dollar that is available to cover its operating expenses and contribute to profit. d. the inventory cost is 41% of the sales price of the inventory items

Explanation / Answer

As Gross profit = Sales revenue less cost of good sold or the direct expene , it is the percentage to sales dollars that is available to cover the operating expenses and contribute to the profit

Gross profit %= Gross profit * 100 / sales

So the correct option is C that is company generated 41 cents out of every sales dollar that is available to cover its operating expense and contribute to profit

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