Question

Gannon Company had the following information at December 31: Finished goods inventory, January 1$50,000 Finished goods inventory, December 31150,000 If the cost of goods manufactured during the year amounted to $2,200,000 and annual sales were $2,750,000, the amount of gross profit for the year is.

Answer 1

Answer:

 = $ 650,000.

Explanation:

Gross profit is the profit made after subtracting the cost of the goods were sold (cost of inputs) to generate the revenue.

Gross profit = Revenue - cost of sales

Cost of sales = opening inventory + production cost - closing inventory

Cost of sales = 50,000 + 2,200,000 - 150,000

                    =  $2,100,000.

Gross profit =  $2,750,000 - $2,100,000.

                 = $ 650,000.