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Homework answers / question archive / 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

Accounting

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?

 

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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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