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Net profit margin: Net profit is internally generated profit from business operations which would be recorded in the balance sheet as retained earnings. This show the earning ratio of the company over sales value.
Net profit margin as a percentage of sales: Net profit margin as a percentage of sales is calculated by dividing net income by net sales. Net profit margin shows the percentage of net income included in net sales.
Step: 1
Determine the net profit margin amount to be considered:
The net profit margin amount to be considered for the product Dr, Da, Di, and De is $15,257; $9,136; $12,485; and $13,136; respectively.
Explanation:
The net profit margin amount to be considered for the product Dr, Da, Di, and De is $15,257; $9,136; $12,485; and $13,136; respectively. This amount has been found by deducting the total variable cost and total period cost from the sales value of each product.
Step: 2
Determine the net profit margin as a percentage of sales as follows: -
C D E - B Net profit margin calculation Particulars Dr Da 4 Sales Value (a) $ 57,231 $ 5 Net profit margin (b) $ 15,257 $ 6 N
Therefore, the net profit margin as a percentage of sales value is 26.7%, 23.0%, 27.7%, and 26.7% for the product Dr, Da, Di, and De, respectively.
Explanation:
The net profit margin as a percentage of sales value has been computed by dividing the net profit margin by the respective sales value for the product Dr, Da, Di, and De.
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