Question

A firm has annual sales of $10 Million, direct material costs are $3.5 Million, direct labor is $2.5 Million and overhead is $3.5 Million. What is the company's profit?

Answer 1

income = 500,000

Step-by-step explanation:

Income = sales - expenses

In this case, we are given with the three cost component, we add them together to get the total cost, or total expenses for the period.

Then we calculate the difference with the revenue and obtain the net income.

sales 10 millions

direct materials 3.5 millions

direct labor 2.5 millions

overhead 3.5 millions

total cost 9.5 millions

net income 0.5 millions = 500,000