Question

Ynh manages a small company with 12 employees. He offers profit sharing where 5% of profits at end of year is distributed evenly to the employees. Each employee earned $2,300 in profit sharing in 2013. What was the total profit?

A. $216,000
B. $138,000
C. $552,000
D. $55,200

Answer 1

To find the total profit, multiply the amount each employee earned from profit sharing ($2,300) by the number of employees (12), and then divide this total by the profit-sharing percentage (5%). The calculation shows the total profit is $552,000.

Step-by-step explanation:

The question is how to calculate the total profit of a company, given that each employee earned $2,300 in profit sharing, which represents 5% of the total profit distributed evenly among 12 employees. To find the total profit, multiply the amount each employee earned from profit sharing ($2,300) by the number of employees (12), and then divide this total by the profit-sharing percentage (5%). The calculation shows the total profit is $552,000.

To find the total profit, we first calculate the total amount distributed to all employees by multiplying $2,300 by 12. This gives us $27,600 as the total amount given to employees as profit sharing.

Since $27,600 represents 5% of the total profit, we can find the total profit by dividing $27,600 by 5% (or 0.05). So, the total profit would be $27,600 / 0.05, which equals $552,000.

Therefore, the correct answer to the question is C. $552,000.