Question

At Sam’s Swimming Pool Cleaning, Sam charges each of his 85 customers $25 per week for 52 weeks of service every year. Since pool cleaning is a service, it has no cost other than labor and supplies, which cost Sam $48,000 each year. Calculate Sam’s annual gross profit. a) $2,125 b) $4,420 c) $62,500 d) $110,500

Answer 1

C

Explanation:

Annual Gross Profit is Revenue - Cost

Sam's Revenue comes from service fee that he charges customers. Sam's revenue for 1 customer is:

25 per week for 52 week = 25 * 52 = 1300 per year

Sam has 85 customers, so total revenue would be:

1300 * 85 = $110,500

Sam's cost is 48,000 per year from pool cleaning.

Thus,

Annual Gross Profit = 110,500 - 48,000 = $62,500

C is the correct answer.