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Question
Cost of goods sold - 60,000,
Sales for the period- 95,000,
Office Administration Expenses - 20,000.Find the Gross Profit.
Cost of goods sold - 60,000,
Sales for the period- 95,000,
Office Administration Expenses - 20,000.
Find the Gross Profit.
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Solution
The correct option is C 35,000
Gross Profit is the profit that the company makes after deducting the costs associated with the operations from the sale proceeds of the business operations.It does not take into consideration any of the non-operational expenses i.e., office expenses, administration expenses and other indirect expenses.Therefore, to find gross profit, administration expenses will not be deducted.Gross profit = Sales - Cost of Goods Sold
= 95,000 - 60,000 = 35,000
Gross Profit is the profit that the company makes after deducting the costs associated with the operations from the sale proceeds of the business operations.
It does not take into consideration any of the non-operational expenses i.e., office expenses, administration expenses and other indirect expenses.
Therefore, to find gross profit, administration expenses will not be deducted.
Gross profit = Sales - Cost of Goods Sold= 95,000 - 60,000 = 35,000
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