Question 1121871
the shoes were sold for 600 and the cost was 420.


that's a gross profit of 180.


the cost of business was 18% of the sales.


that means the cost of business was .18 * 600 = 108.


subtract that from the gross profit and the net profit becomes 180 - 108 =  72.


if you look at percent profit over cost, then the gross profit percent = 180 / 420 * 100 = 42.86% and the net profit percent = 72 / 420 * 100 = 17.14%.


but .....


gross profit margin formula is revenue minus cost of goods sold and gross profit margin formula is gross profit divided by revenue.


and .....


net profit margin formula is revenue minus total cost of doing business and net profit margin is net profit divided by revenue.


this would lead to different percentages.


gross profit margin would then be 180 / 600 * 100 = 30% and net profit margin would then be 72 / 600 * 100 = 12%.


it's not clear what your instructors are looking for, so it's difficult to come up with one answer to the question.


both answers apply depending on what your instructor is looking for.


here's a good reference on gross profit margin and net profit margin that might help you to understand what i'm talking about.


<a href = "https://www.grow.com/blog/gross-profit-margin-net-profit-margin/#comment-449" target = "_blank">https://www.grow.com/blog/gross-profit-margin-net-profit-margin/#comment-449</a>


i'm sorry if i confused you, but i became confused after reading this article.


without looking at the article, i would have answered the first way, but after looking at the article, i was not so sure.


take your pick either way and/or check with your instructor to see which of these concepts he is looking for.


first way:


gross profit percent = 180 / 420.
net profit percent = (600 - 18% of 600) / 420.


second way:


gross profit margin = 180 / 600.
net profit margin = (600 - 18% of 600) / 600.