A Tampa job has earned revenue of $390,000 and direct job costs of $292,500. What gross profit percentage is shown on earned revenue?
Correct Answer
B) 25.0%
Gross profit is $97,500, and $97,500 divided by $390,000 equals 25.0%.
Why This Is the Correct Answer
Gross profit is $97,500, and $97,500 divided by $390,000 equals 25.0%.
Why the Other Options Are Wrong
Option A: 22.5%
22.5% is below the supported result for gross profit percentage; it likely uses the wrong base, period, or account bucket.
Option C: 27.5%
27.5% is above the supported result for gross profit percentage; it likely adds an unsupported amount or compares the wrong financial base.
Option D: 30.0%
30.0% is above the supported result for gross profit percentage; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Comparing Margins money test: bucket before math for gross.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Financial Ratios, Income Account Ratios; use the job ledger figures in the stem and recompute the same accounting measure.
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