Answer:
The answer is 3. Subtracting cost of goods sold from net sales
Explanation:
Gross margin or Gross profit is the profit a business earn after deducting cost associated with making the goods from net sales(Net sales - Cost of goods sold or Cost of sales)
To calculate cost of goods sold - opening inventory/stock plus purchases minus closing inventory/stock.
The attached file also support this statement.
Answer:
The correct answer is number (3): Subtracting cost of goods sold from net sales.
Explanation:
A Gross Margin is a rough measure of how profitable companies' activities are. This calculates how much the business holds sales revenue after all the direct costs associated with making a product or providing a service. Direct costs are inventory, labor, and expenses related to the manufacturing of a product. Gross Margin is calculated with the following formula:
Gross Margin = Net Sales − COGS
Where:
COGS = Cost of goods sold
