A Painter Pays $500 for Paint He Uses to Repaint

question 83

Multiple Choice

A painter pays $500 for paint he uses to repaint a house.He then presents a bill for $1200 that covers his time and expenses to the homeowner.How much do these transactions add to GDP?

• A)$500
• B)$700
• C)$1200
• D)$1700

---

Definitions:

Gross Margin

Gross Margin is the difference between sales revenue and the cost of goods sold, expressed as a percentage of sales, indicating the efficiency of production and pricing.

Contribution Margin Income Statement

An income statement format that separates variable costs from fixed costs, focusing on contribution margin.

External Reporting

The provision of financial and non-financial information to external stakeholders, such as investors, creditors, and regulatory agencies, usually formal and standardized.

Fixed Manufacturing Costs

Expenses that do not change with the level of production, including things like rent for factory space and salaries of permanent staff.