Use This Balance Sheet and Income Statement for the First

question 77

Multiple Choice

Use this balance sheet and income statement for the first year of operations for Layton Novelties to answer the following question. Use ending balances whenever average balances are required for computing ratios. Laytan Navelties
Income St-tement
Far the Year Ended December 31, 2010
$\begin{array}{lr}\text { Net sales } & \$ 80,000 \\\text { Cost of goods sold } & 32,000 \\\text { Gross margin } & \$ 48,000 \\\text { Operating expenses } & 26,400\\\text { Net income }&\$21,600\end{array}$ The profit margin for Layton Novelties is

• A) 30 percent.
• B) 75 percent.
• C) 60 percent.
• D) 27 percent.