Question

Campus Stop is considering a contract to sell merchandise to a campus organization for $23,000. This merchandise will cost Campus Stop $14,400. Would this contract increase (or decrease) Campus Stop’s dollars of gross profit and its gross profit percentage?

Answer 1

Gross profit = $8,600

Gross profit percentage = increase by 37.39%

Step-by-step explanation:

The formula to compute the gross profit is shown below:

= Sales revenue - the cost of goods sold

Or

= Sale value of merchandise - the cost of the merchandise

= $23,000 - $14,400

= $8,600

The computation of the gross profit percentage is shown below:

= (Gross profit ÷ Sales revenue) × 100

= ($8,600 ÷ $23,000) × 100

= 37.39%

Hence, the gross profit is increased by 37.39%