Cy is in business as a sole trader, selling a range of corkscrews and bottle openers.In the month of March 20X4 revenue is £4250.Cy's closing inventory of £2250 is £380 higher than his opening inventory.Purchases during the month were £2950.What is Cy's gross profit for March 20X4?

Question

Quizplus · Accepted Answer

To calculate the gross profit, we need to use the formula:

Gross Profit = Revenue - Cost of Goods Sold

First, we need to calculate the cost of goods sold (COGS):

COGS = Opening Inventory + Purchases - Closing Inventory

COGS = (£2250 + £2950) - (£2250 + £380) = £4570 - £2630 = £1940

Now, we can calculate the gross profit:

Gross Profit = Revenue - COGS 
Gross Profit = £4250 - £1940 = £2310

Therefore, the answer is Choice C (£1680).

Cy Is in Business as a Sole Trader, Selling a Range