During the current year, merchandise is sold for $898,000. the cost of merchandise sold sold is $664,520.
a. what is the amount of the gross profit?
b. compute the gross profit percentage (gross profit divided by sales). round to the nearest whole number.
c. when will the income statement necessarily report a net income?

(a) $233,480

(b) $26%

Explanation:

1. Sales = $898,000

Cost of Goods Sold = $664,520

Gross Profit = $233,480

2.Gross Profit Margin = Gross Profit ÷ Sales

                                     = $233,480 ÷ $898,000

                                     = 26%

3. The Income Statement will not necessarily report a profit despite the gross profit margin is high.

This is due to the fact that the organisation may be cost inefficient in operating costs leading to a loss.

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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