Multiple Choice
Which of the following best describes 'Net Sales' on a company's income statement?
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4. Merchandising Operations
Net Sales
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If a company makes a profit of 15\% on every faucet sold and the selling price of one shower faucet is \$120, what is the profit on one shower faucet?
A
$20
B
$15
C
$12
D
$18
Verified step by step guidance1
Step 1: Understand the problem. The company makes a profit of 15% on every faucet sold, and the selling price of one shower faucet is $120. We need to calculate the profit amount for one faucet.
Step 2: Recall the formula for calculating profit. Profit is determined by multiplying the selling price by the profit percentage. The formula is: Profit = Selling Price × Profit Percentage.
Step 3: Convert the profit percentage into decimal form. Since percentages are out of 100, divide 15 by 100 to get 0.15.
Step 4: Substitute the values into the formula. Selling Price = $120 and Profit Percentage = 0.15. The formula becomes: Profit = 120 × 0.15.
Step 5: Perform the multiplication to find the profit amount. Multiply 120 by 0.15 to determine the profit on one shower faucet.
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