Question

Spartan Corporation, a U.S. company, manufactures green eye shades for sale in the United States and Europe. All manufacturing activities take place in Michigan. During the current year, Spartan sold 10,000 green eye shades to European customers at a price of $10 each. Each eye shade costs $4 to produce. All of Spartan’s production assets are located in the United States. For each independent scenario, determine the source of the gross income from sale of the green eye shades.

Answer 1

The Gross profit from sale of the green eye shades is $60,000

Step-by-step explanation:

To get gross profit , we make the revenue minus cost of sales.

Gross profit = Revenue - cost of sales.

Revenue= units sold* price

Cost of sales=units sold* unitary cost

units sold=10,000

price=$10

unitary cost=$4

Revenue=10,000*$10=$100,000

Cost of sales=10,000* $4=$40,000

Gross profit = Revenue - cost of sales.

Gross profit =$100,000-$40,000=$60,000