The Following Data Is Available - Using the Gross Profit Method,the Amount of Gross Profit

question 149

Multiple Choice

The following data is available: $$\begin{array} { | r | r | } \hline \text { Net sales, first month } & \$ 13,000 \\\hline \text { Normal gross profit } & 45 \% \\\hline \text { Beginning inventory } & 8,000 \\\hline \text { Net purchases } & 7,000 \\\hline\end{array}$$
- Using the gross profit method,the amount of Gross profit would be:

• A) $15,000.
• B) $6,750.
• C) $5,850.
• D) $3,600.

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Definitions:

Variable Product Cost

Refers to the costs that vary directly with the level of production output, including costs like raw materials and direct labor.

Contribution Margin

The amount remaining from sales revenue after variable costs have been subtracted, used to cover fixed costs and to generate profit.

Production Capacity

The maximum amount of goods or services that can be produced in a given time period with available resources.

Materials Markup

An amount added to the cost of materials to cover overhead and profit in the pricing of products.