A job sells for $72,000 and direct cost is $54,000. What gross margin percentage is shown?
Correct Answer
A) 25 percent.
Gross margin is gross profit divided by selling price: ($72,000 - $54,000) / $72,000 = 25 percent.
Why This Is the Correct Answer
Gross margin is gross profit divided by selling price: ($72,000 - $54,000) / $72,000 = 25 percent.
Why the Other Options Are Wrong
Option B: 18 percent.
18 percent. is below the supported result for margin; it likely uses the wrong base, period, or account bucket.
Option C: 33 percent.
33 percent. is above the supported result for margin; it likely adds an unsupported amount or compares the wrong financial base.
Option D: 50 percent.
50 percent. is above the supported result for margin; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Margin fence: markup starts at cost, margin looks back from price.
Reference Hint
Study anchor (closed-book): memorize Margin from CSLB Law and Business Study Guide; California tax and payroll guidance / CSLB Law and Business Study Guide Business Finances; know the rule or calculation trigger without relying on exam-room lookup.
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