Question

The Seward Sew Shop bought 120 spools of thread for 39¢ each. The overhead was $8.47. The shop sold each spool for 75 cents. What was the gross profit and the net profit?

a) Gross profit: $25.80; Net profit: $17.33
b) Gross profit: $25.80; Net profit: $17.47
c) Gross profit: $28.80; Net profit: $20.33
d) Gross profit: $28.80; Net profit: $20.47

Answer 1

The gross profit is $43.20 and the net profit is $34.73.

Step-by-step explanation:

To calculate the gross profit, we need to subtract the cost of goods sold from the total revenue. The cost of goods sold is the sum of the cost per unit multiplied by the number of units sold. In this case, the cost per unit of thread is 39 cents and the number of units sold is 120. So the cost of goods sold is 39 cents * 120 = $46.80. The total revenue is the selling price per unit multiplied by the number of units sold. In this case, the selling price per unit is 75 cents and the number of units sold is 120. So the total revenue is 75 cents * 120 = $90. The gross profit is the total revenue minus the cost of goods sold, which is $90 - $46.80 = $43.20.

To calculate the net profit, we need to subtract the overhead expenses from the gross profit. Given that the overhead expenses are $8.47, the net profit is $43.20 - $8.47 = $34.73.