Question

Required information [The following information applies to the questions displayed below] Wolverine World Wide, Inc., prides itself as being the world's leading marketer of U.S. branded non-athletic footwear The following data (in millions) were reported for the third quarter of 2016: $1,360 Net Sales Income Tax Expense Dividends Salaries and Wages Expense Cost of Goods Sold Interest Expense 325 2-a. How much was the gross profit? (Enter your answer in millions.) 2-b. What was the gross profit percentage? (Round your percentage to 1 decimal place.) 2-a 2- Gross Profit Gross Profit Percentage

Answer 1

Solution:

1a.Calculation of Gross profit:

The formula for calculating the Gross Profit is

Gross profit = Net sales – Cost of goods sold

As per the information given in the question we have

Net sales = $ 1,360 Million ; Cost of goods sold = $ 825 Million ;

Applying the above information in the formula we have

= $ 1,360 - $ 825

= $ 535

Thus the Gross profit ( In Millions ) = $ 535

1b.Calculation of Gross profit Percentage:

The formula for calculating the Gross Profit Percentage is

= ( Gross profit / Net sales )

= ( Net Sales – Cost of goods sold ) / Net Sales

As per the information given in the question we have

Net sales = $ 1,360 Million ; Cost of goods sold = $ 825 Million

Applying the above information in the formula we have

= ( $ 1,360 - $ 825 ) / $ 1,360

= $ 535 / $ 1,360

= 0.393382

= 39.3382 %

= 39.3 % ( when rounded off to one decimal place )

Thus the Gross profit percentage = 39.3 %