Statement of profit or loss — practice questions

Gross profit = 820 000 − 492 000 = **$328 000**$

Operating profit = 328 000 − 218 000 = **$110 000**$

Profit for the year = 110 000 − 12 000 − 24 000 = **$74 000**$

This question requires working backwards to find Revenue and then proceeding down the statement.

1. Calculate Revenue

The Gross Profit Margin is given by the formula: Gross Profit Margin = (Gross Profit / Revenue) x 100

We can rearrange this to find Revenue: Revenue = Gross Profit / (Gross Profit Margin / 100)

Calculation: Revenue = $450,000 / 0.40$ **Revenue = $1,125,000**$

2. Calculate Operating Profit

First, find total operating expenses: Operating Expenses = Administrative expenses + Distribution costs Operating Expenses = $120,000 +$85,000 = $205,000$

Now, calculate Operating Profit: Operating Profit = Gross Profit - Operating Expenses

Calculation: Operating Profit = $450,000 -$205,000 **Operating Profit = $245,000**$

3. Calculate Profit before tax

Profit before tax is found by deducting net finance costs from operating profit. Profit before tax = Operating Profit - Finance costs

Calculation: Profit before tax = $245,000 -$22,000 **Profit before tax = $223,000**$