Last Updated 07 Sep 2020

Generally Accepted Accounting Principles and Profit Margin Percentage

Category Accounting
Essay type Research
Words 354 (1 page)
Views 177

Place your name and the date at the top of the page, and answer the following questions making sure you SHOW YOUR WORK.

A hardware store bought a gross (12 dozen) of hammers, paying $602. 40 for the total order. The retailer estimated operating expenses for this product to be 35% of sales, and wanted a net profit of 5% of sales. The retailer expected no markdowns. What retail selling price should be set for each hammer? [Hint: The way to handle this problem is to say that the Gross Profit Margin has to cover the 35% of expenses applicable to the product plus the 5% of net profit wanted.

And once you know the GPM%, you know the Cost percentage of the Selling Price.

Order custom essay Generally Accepted Accounting Principles and Profit Margin Percentage with free plagiarism report


Competition in a line of sporting goods limits the selling price on a certain item to $25. If the store owner feels a margin of 35% is needed to cover expenses and return a reasonable profit, what is the most the owner can pay for this item? Hint: Remember, if you know the margin percentage, then you know the cost percentage.

A retailer with annual net sales of $2 million maintains a markup of 66. 67% based on cost.

Operating expenses average 35%. What are the retailer's gross margin and net profit in dollars? A Markup on Cost is equivalent to what Gross Profit Margin percentage?

The cost to a manufacturer of flat panel displays for producing its newly designed TV Display 1000 is $250. 00. The cost for Research and Development of their new product being sold to OEMs as a component product has been one million dollars. The sales and promotional budget is $600,000, and all other fixed costs amount to $200,000.

The Marketing Director and his staff have estimated demand for the new display to be between 50,000 and 75,000 units over the next year. They also have decided to price the new Display 1000 at $450 to their OEM customers.

  • How many Display 1000s does the manufacturer have to sell in order to breakeven?
  • What is the manufacturer’s unit contribution to profit in percentage?
  • What is the manufacturer’s markup on cost in percentage?

This essay was written by a fellow student. You can use it as an example when writing your own essay or use it as a source, but you need cite it.

Get professional help and free up your time for more important courses

Starting from 3 hours delivery 450+ experts on 30 subjects
get essay help 124  experts online

Did you know that we have over 70,000 essays on 3,000 topics in our database?

Cite this page

Explore how the human body functions as one unit in harmony in order to life

Generally Accepted Accounting Principles and Profit Margin Percentage. (2018, Jan 20). Retrieved from

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy

Save time and let our verified experts help you.

Hire writer