A Winter Park project earned revenue of $1,284,000 and recorded job cost of $924,480. What gross profit percentage should be reported?
Correct Answer
C) 28.0%
Gross profit percentage is gross profit divided by revenue.
Why This Is the Correct Answer
Gross profit percentage is gross profit divided by revenue.
Why the Other Options Are Wrong
Option A: 38.9%
38.9% is above the supported result for gross profit percentage; it likely adds an unsupported amount or compares the wrong financial base.
Option B: 72.0%
72.0% is above the supported result for gross profit percentage; it likely adds an unsupported amount or compares the wrong financial base.
Option D: 172.0%
172.0% is above the supported result for gross profit percentage; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Gross fence: markup starts at cost, margin looks back from price.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Three, Financial Analysis, Markup and Gross Profit; use the job ledger figures in the stem and recompute the same accounting measure.
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