Bonita industries had the following information at december 31: finished goods inventory, january 1 $ 7 finished goods inventory, december 31 15 if the cost of goods manufactured during the year amounted to $22 and annual sales were $275, the amount of gross profit for the year is

Gross Profit 630,000

Explanation:

Gross Profit: Is the amount remaining from the sales revenue after the cost of goods.

The formula for Gross profit will be:

sales revenue - cost of goods sold = gross profit

To get the cost of good sold we will solve it through the inventory identity:

Beginning + cost f goods manufactured = ending + COGS

the left side are the income of units, while the right side the destination of the units. A unit can be either be sold or keep at inventory.

70,000 + 2,200,000 = 150,000 + COGS

2,270,000 - 150,000 = COGS = 2,120,000

Then we move to the gross profit formula:

Sales Revenue        2,750,000

COGS                     (2, 120,000)

Gross Profit                630,000

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