A firm's gross profit margin equals 35.2% and the operating profit margin equals 26.7%. If its net sales equal 6,128, the firm's SGA expenses equal ________.
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A. B. C. D.Explanation
Gross Profit Margin = Gross Profit/Net sales and Operating Profit Margin = Operating Profit/Net sales. Therefore, Gross Profit = 6,128*0.352 = 2,157 and
Operating Profit = 6,128*0.267 = 1,636. Now, Operating profit = income before interest, depreciation and taxes (EBDIT)= Gross Profit - Sales & General
Expenses, so 2,157 - 1,636 = 521.