Question

Carla sells hot coffee, cider, and tea from a sidewalk cart in New York City. Last month she sold $4,000 worth of product. Her variable costs during the same time period were $1,000 (buying her beverages in bulk). What is the business’s gross profit and gross profit margin last month?

Answer 1

The gross profit is the income made from the sales overall, taking into account if there is any of these items such as interest, tax and having the net profit calculated. I believe that the answer for this is $3,000 - ($4,000 - $1,000) = $3,000. The gross profit margin would be the percentage of money made, this means deducting expenses from revenue and dividing this number by the profits of the sales, being sure to express the answer as a percentage value, calculation is this; $3,000/$4,000 x 100 = 75%.

Answer 2

The business’s gross profit and gross profit margin for last month is $3,000 and 75% respectively.

Gross profit refers to the income made from the sales overall.

• Net profit are derived after taking into account items like interest, tax, wages etc

• Gross profit margin is a margin that compares the gross profit to the revenue.

Given information

Sold (Revenue) = $4,000

Cost (Cost) = $1,000

Gross profit = Revenue - Sales

Gross profit = $4,000 - $1,000

Gross profit = $3,000

Gross profit margin = Gross profit / Revenue * 100

Gross profit margin = $3,000/$4,000 * 100

Gross profit margin = 0.75 * 100

Gross profit margin = 75%

Hence, the business’s gross profit and gross profit margin for last month is $3,000 and 75% respectively.

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