Your store buys ice cream at a cost of $1.50 a half gallon and sells it for $4 a half gallon.Selling,general,and administrative expenses are $0.75 per half gallon.Which of the following statements is correct?
A) Your gross profit per half gallon is $2.50.
B) Your gross profit per half gallon is $1.75.
C) The difference between the selling price and the cost is recorded in the gross profit account.
D) The difference between the selling price and the cost is recorded in the Net Profit account.

Question

Quizplus · Accepted Answer

Gross profit is the difference between the selling price and the cost of goods sold. In this case, the selling price is $4 and the cost of goods sold is $1.50, so the gross profit is $2.50.

Your Store Buys Ice Cream at a Cost of $1