Question

Calculate the Gross Profit, using the following information:

Net Sales Revenue: $200,000
Cost of Goods Sold (COGS): $140,000
Depreciation Expense: $20,000.
Select one:
a. 60,000
b. 120,000
c. 100,000
d. 40,000

Answer 1

To find the Gross Profit, subtract the Cost of Goods Sold from the Net Sales Revenue, ignoring the depreciation expense. With these values, the Gross Profit is $60,000. Hence, the correct answer is option (a).

Step-by-step explanation:

To calculate the Gross Profit, you need to subtract the Cost of Goods Sold (COGS) from the Net Sales Revenue. The depreciation expense is not considered in the calculation of Gross Profit since it is an operating expense, not a direct cost of producing the goods. So the calculation is as follows:

Net Sales Revenue: $200,000
COGS: -$140,000
Gross Profit: $60,000