A Company Shows the Following Balances What Is the Gross Profit Rate?
A) 56%
B) 70

question 101

Multiple Choice

A company shows the following balances: $$\begin{array} { l r } \text { Sales Revenue } & \$ 1,000,000 \\\text { Sales Returns and Allowances } & 175,000 \\\text { Sales Discounts } & 25,000 \\\text { Cost of Goods Sold } & 560,000\end{array}$$ What is the gross profit rate?

• A) 56%
• B) 70%
• C) 44%
• D) 30%

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the production of goods or provision of services.

Manufacturing Overhead

Any production expenses beyond direct labor and materials, which include overheads like equipment wear and tear, utilities, and rental fees.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, including utilities, maintenance, and salaries of managers.

Cost of Goods Sold

The total cost associated with making or acquiring any goods sold during a specific period, including materials and labor.