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# In 1995 a certain store had 1,800 tools in stock that had been purchas

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Manager
Joined: 19 Nov 2007
Posts: 191

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12 Nov 2009, 02:29
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Difficulty:

15% (low)

Question Stats:

82% (01:50) correct 18% (01:48) wrong based on 232 sessions

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In 1995 a certain store had 1,800 tools in stock that had been purchased for \$30 each. If 1,000 of these tools were sold in 1995 for \$40 each and the remaining 800 were sold in 1996 for \$50 each, how many greater was the gross profit on the tools sold in 1996 than the gross profit on those sold in 1995?

A. \$0
B. \$6,000
C. \$8,000
D. \$32,000
E. \$40,000
Manager
Joined: 10 Sep 2009
Posts: 80

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12 Nov 2009, 02:33
2
Profit = Revenue - Charge

P(1995) = 40.1000 - 30.1000 = 10.000
P(1996) = 50.800 - 30.800 = 20.800 = 16.000

Ans is 6000\$
Manager
Joined: 13 Aug 2009
Posts: 178
Schools: Sloan '14 (S)

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12 Nov 2009, 02:51
2
1
The keyword here is "Gross Profit":

Gross Profit = (Selling Price - Original Price)*(# of Items Sold)

So lets figure out what the Gross Profit for 1995:

GP1995 = (40-30)*(1000) = 10000

And the Gross Profit for 1996:

GP1996 = (50-30)*(800) = 16000

So the difference would be:

16000-10000 = 6000

VP
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01 May 2011, 22:51
profit '95 = 1000*40 - 1000*30= 10,000
profit '96 = 800 * 50 - 800 *30 = 16,000
Thus difference = 6000.B
Intern
Joined: 13 Jan 2018
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17 Feb 2018, 17:09
Hello, I was uncertain about Gross Profit and Net Profit. I chose Answer A, "0" because the sales in 1995 was 40,000.
1000 * 40 = 40,000
In 1996 sales was also 40,000. 800 * 50 = 40,000. So there was no difference. I thought that was Gross profit.

My thinking is that NET profit is the one that would factor on the initial cost of buying all for \$30 each.
Thus the NET profit in 1995 is \$10 profit * 1000 = \$10,000
ANd NET profit in 1996 is \$20 * 800 = \$16,000

When do I use NET profit vs GROSS profit?
Re: In 1995 a certain store had 1,800 tools in stock that had been purchas &nbs [#permalink] 17 Feb 2018, 17:09
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