Local Co. has sales of

$10.9

million and cost of sales of

$6.4

million. Its selling, general and administrative expenses are

$450,000

and its research and development is

$1.5

million. It has annual depreciation charges of

$1.3

million and a tax rate of

35%.

a. What is Local's gross margin?

b. What is Local's operating margin?

c. What is Local's net profit margin?