It costs Homer's Manufacturing $0.65 to produce baseballs and Homer sells them for $4.00 a piece. Homer pays a sales commission of 5% of sales revenue to his sales staff. Homer also pays $16,000 a month rent for his factory and store, and also pays $81,000 a month to his staff in addition to the commissions. Homer sold 69,500 baseballs in June. If Homer prepares a traditional income statement for the month of June, what would be his gross profit?

Question

Quizplus · Accepted Answer

To calculate gross profit, we need to first calculate the total revenue earned by Homer's Manufacturing.

Total revenue = Number of baseballs sold x Selling price per baseball 
Total revenue = 69,500 x $4.00 = $278,000

Next, we need to calculate the cost of goods sold (COGS), which is the cost of producing the baseballs.

COGS = Number of baseballs sold x Cost per baseball 
COGS = 69,500 x $0.65 = $45,175

So, 
Gross profit = Total revenue - COGS 
Gross profit = $278,000 - $45,175 
Gross profit = $232,825

Therefore, the answer is B, $232,825.

It Costs Homer's Manufacturing $0