Boston Company sells twenty items for $1,000 per unit,and has a cost of goods sold percentage of 70%.The gross profit to be reported for selling 20 items is:

Question

Quizplus · Accepted Answer

The cost of goods sold percentage is 70%, which means that the cost of producing one item is 70% of its selling price, or $700 ($1,000 x 0.70). Therefore, the total cost of goods sold for selling 20 items is $14,000 ($700 x 20).

To calculate the gross profit, we need to subtract the cost of goods sold from the revenue generated from selling the 20 items. The revenue is $20,000 ($1,000 x 20).

Gross profit = Revenue - Cost of goods sold
Gross profit = $20,000 - $14,000
Gross profit = $6,000

Therefore, the gross profit to be reported for selling 20 items is $6,000 (Choice B).

Boston Company Sells Twenty Items for $1,000 Per Unit,and Has