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After the initial year of operations, the Beige Company had the following data in its operating results: Net profit is P750,000
After the initial year of operations, the Beige Company had the following data in its operating results: Net profit is P750,000. Selling expenses are 12.5% of sales and also equal to 25% of cost of goods sold. Administrative expenses and other expenses are 17.5% and 5% of sales, respectively. What is Beige's gross profit for the year?
Expert Solution
Answer:
Sales = 100%
Selling expenses = 12.5%
Cost of goods sold = 25%
Administrative and other expenses = 17.5%
sales = 5%
Total expenditure excluding sales = 60%
Net profit is therefore = 100% - 60% = 40%
P750,000 = 40%
? = 100%
= (750,000 * 100%)/ 40% = P1,875,000
Cost of goods sold is 25% of P1,875,000 = 468,750
Gross profit = Sales - Cost of goods sold
= 1,875,000 - 468,750 = 1,406,250
=1,406,250
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