Table 1 shows monthly sales revenue and costs for a mobile coffee cart operating at a railway station. The owner is checking whether the business met its pr...
Question 1 Report
Table 1 shows monthly sales revenue and costs for a mobile coffee cart operating at a railway station. The owner is checking whether the business met its profit objective before deciding whether to buy another cart. All figures are for April.
| Item | Amount ($) |
|---|---|
| Sales revenue | 12,600 |
| Cost of coffee, milk and food | 4,100 |
| Wages and stall rent | 5,700 |
(a) Identify the term used to describe sales revenue less the cost of coffee, milk and food. [1]
(b) Show the coffee cart's net profit for April. [2]
Answer Details
(a) Sales revenue less the direct cost of coffee, milk and food is gross profit. [1]
(b) Net profit is revenue less all costs:
\[\$12\,600-\$4\,100-\$5\,700=\$2\,800\]
The coffee cart's net profit for April is $2,800. [2]
Gross profit removes cost of sales only; net profit also deducts expenses such as wages and rent.
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