McQueen,Inc.buys premium ice cream at a cost of $3.00 a gallon and sells it for $8 a gallon.Selling,general,and administrative expenses are $1.50 per gallon.Which of the following statements is correct?

Question

Quizplus · Accepted Answer

Gross profit = Net sales − Cost of goods sold
= $8.00 − $3.00 = $5.00
The difference between selling price and cost is the company's gross profit (also called gross margin),which is a subtotal on the multistep income statement,but is not an account.