If gross profit is P250,135, what is the general administrative expense (15% of gross profit) and selling expense (20% of gross profit)?
Understand the Problem
The question is asking how to calculate the general administrative expense and selling expense based on given percentages of the gross profit. It requires applying specific percentage computations based on the provided gross profit amount.
Answer
General administrative expense: P37,520.25; Selling expense: P50,027.00.
Answer for screen readers
The general administrative expense is P37,520.25 and the selling expense is P50,027.00.
Steps to Solve
- Calculate General Administrative Expense
To find the general administrative expense, multiply the gross profit by the percentage allocated for this expense. The formula is:
$$ \text{General Administrative Expense} = \text{Gross Profit} \times 0.15 $$
Substituting the values:
$$ \text{General Administrative Expense} = P250,135 \times 0.15 $$
- Calculate Selling Expense
Next, calculate the selling expense similarly by multiplying the gross profit by the percentage for selling expenses. The formula is:
$$ \text{Selling Expense} = \text{Gross Profit} \times 0.20 $$
Substituting the values:
$$ \text{Selling Expense} = P250,135 \times 0.20 $$
- Evaluate the Results
Now, compute the values from the equations:
-
For general administrative expense:
- $$ P250,135 \times 0.15 = P37,520.25 $$
-
For selling expense:
- $$ P250,135 \times 0.20 = P50,027.00 $$
The general administrative expense is P37,520.25 and the selling expense is P50,027.00.
More Information
The calculations used here are standard methods in accounting to determine expenses based on a percentage of gross profit. Understanding the distinction between different types of expenses is crucial for managing finances in a business.
Tips
- Miscalculating the percentage values by forgetting to convert percentages to decimals.
- Incorrectly applying the percentages to the gross profit amount.
