Question

Based on the following data, what is the gross profit for the company?Sales$ 1,000,000Net purchases of raw materials 600,000Cost of goods manufactured 800,000Marketing and administrative expenses 250,000Indirect manufacturing costs 500,000

Answer 1

$600,000

Step-by-step explanation:

we must determine the costs of goods sold (COGS) = finished goods beginning inventory + cost of manufactured goods - finished goods ending inventory = $100,000 + $800,000 - $500,000 = $400,000

gross profit = total sales - COGS = $1,000,000 - $400,000 = $600,000

Answer 2

Gross profit for the company is = $200000

Step-by-step explanation:

Gross Profit is Calculated as

Sales - Cost of sales

In case of a Manufacturing Company Cost of Sales are Cost of Finished Goods Manufactured

Sales = $ 1000000 (given)

Cost of Manufactured Goods : see calculation

Cost of Finished Goods Manufactured is Calculated as

=Opening Stock of Finished Goods + Cost of Finished Goods Manufactured for that Period - Closing Stock of Finished Goods

=$0+$800000-$0

=$800000

Therefore gross profit for the company is = $200000 ($ 1000000 - $800000)

ITEMS DISREGARDED

Marketing and administrative expenses $ 250000 ; This is a Periodic Cost

Indirect manufacturing costs $500,000 : Already Accounted for in Cost of Manufactured Goods

Net purchases of raw materials $600,000 : Already Accounted for in Cost of Manufactured Goods]