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22 August, 00:22

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?

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  1. 22 August, 03:16
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    income = 500,000

    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
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