To find the gross profit from the provided financial data, we need to follow a systematic approach. Let's break down the steps clearly.
Step 1: Understand the Components
Gross profit is calculated using the formula:
[
\text{Gross Profit} = \text{Net Sales} - \text{Cost of Goods Sold (COGS)}
]
From the table, we have:
-
Net Sales: ₦370,000
-
Cost of Goods Sold (COGS): ₦230,000
Step 2: Calculate Gross Profit
Now, we can substitute the values into the formula:
[
\text{Gross Profit} = ₦370,000 - ₦230,000
]
Calculating this gives:
[
\text{Gross Profit} = ₦140,000
]
Step 3: Identify the Correct Option
From the options provided:
- A. ₦150,000
- B. ₦370,000
- C. ₦230,000
- D. ₦140,000
The correct answer is
D. ₦140,000.
Step 4: Explanation of Why Other Options Are Incorrect
-
Option A: ₦150,000 - This amount does not correspond to any calculation based on the provided data. It could be a miscalculation or misunderstanding of the gross profit formula.
-
Option B: ₦370,000 - This figure represents the total net sales, not the gross profit. Gross profit is derived from subtracting COGS from net sales, so this option is incorrect.
-
Option C: ₦230,000 - This amount is the cost of goods sold, not the gross profit. Gross profit is what remains after deducting COGS from net sales, making this option incorrect as well.
Common Pitfalls
- Confusing Net Sales with Gross Profit: It's essential to remember that net sales are the total revenue from sales, while gross profit is what remains after deducting the cost of goods sold.
- Misunderstanding COGS: Ensure you correctly identify COGS from the financial data. It is crucial for calculating gross profit accurately.
Revision Summary
- Gross profit is calculated as Net Sales minus Cost of Goods Sold (COGS).
- The formula is: Gross Profit = Net Sales - COGS.
- In this case, Gross Profit = ₦370,000 - ₦230,000 = ₦140,000.
- The correct answer is D. ₦140,000; other options do not represent gross profit correctly.
By understanding these concepts and calculations, you can confidently approach similar questions in your exams.