During the year, Grasso Ltd sold 2000 items at $30 each. The cost price of the items was $22 each. Operating expenses totalled $7 000 and income tax expense was $5 000. What was the operating profit before tax of Grasso Ltd for the year?

Question

Quizplus · Accepted Answer

Total revenue = 2000 x $30 = $60,000
Total cost of goods sold = 2000 x $22 = $44,000
Gross profit = $60,000 - $44,000 = $16,000
Operating profit before tax = Gross profit - operating expenses - income tax expense = $16,000 - $7,000 - $5,000 = $4,000

During the Year, Grasso Ltd Sold 2000 Items at $30