If costs of goods sold is $560,000 and its gross profit rate is 20%,what is the gross profit?

Question

Quizplus · Accepted Answer

Gross profit is calculated as sales minus the cost of goods sold. Given a gross profit rate of 20%, it means that gross profit is 20% of sales. To find the sales, we can set up the equation: Sales - Cost of Goods Sold = Gross Profit, where Gross Profit = 20% of Sales. Rearranging the equation to solve for Sales gives us Sales = Cost of Goods Sold / (1 - Gross Profit Rate). Plugging in the numbers: Sales = $560,000 / (1 - 0.20) = $560,000 / 0.80 = $700,000. Therefore, Gross Profit = Sales - Cost of Goods Sold = $700,000 - $560,000 = $140,000.

If Costs of Goods Sold Is $560,000 and Its Gross