Toby's Farm Store Buys Portable Generators for $500 and Sells

question 176

Multiple Choice

Toby's Farm Store buys portable generators for $500 and sells them for $800.He pays a sales commission of 5% of sales revenue to his sales staff.Toby pays $2,000 a month rent for his store,and also pays $1,800 a month to his staff in addition to the commissions.Toby sold 200 generators in June.
-If Toby prepares a traditional income statement for the month of June,what would be his gross profit?

• A)$260,000
• B)$160,000
• C)$60,000
• D)$100,000

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Definitions:

Normal Rate

A standard or usual level of financial return on investment or interest on loans.

Supply

The total amount of a product or service that is available to consumers at a given price over a specific period.

Profits

The financial gain obtained when the revenues generated from business activities exceed the expenses, costs, and taxes involved in sustaining the activity.

Industry Supply Curve

A graphical representation showing the relationship between the price of a good and the total output of the industry at various prices.