Stanley's Bicycles Store Buys Bicycles on Average for $610 and Sells

question 183

Multiple Choice

Stanley's Bicycles store buys bicycles on average for $610 and sells them on average for $780. He pays a sales commission of 15% of sales revenue to his sales staff. Stanley pays $1700 a month rent for his store, and also pays $8000 a month to his staff in addition to the commissions. Stanley sold 160 bicycles in June. If Stanley prepares a traditional income statement for the month of June, what would be his gross profit?

• A)$222,400
• B)$27,200
• C)$97,600
• D)$124,800

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Definitions:

Marginal Revenue Product

The additional revenue generated by employing one more unit of a particular input, assuming all other inputs remain constant.

Wage Rate

The amount of money a worker is paid per unit of time, such as an hour or a month.

Marginal Revenue Product

The extra income produced by using an additional unit of a production input.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production, such as labor or capital.