Profit And Loss And Balance Sheets Page 20
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26Try this exercise.
ABC Engineering manufactures metal pipes for the water industry. At the start of the
trading period it had stock of metal valued at £10,000. It bought extra stock valued at
£5,500 and had stock of £3,000 at the end of the period. The value of its sales was £35,000.
ABC Engineering includes power and direct labour costs in its
cost of sales.
These were £1,000 for power and £8,000 for labour.
1 : What was ABC Engineering's gross profit?
Suppose ABC Engineering had bought and used additional stock worth £12,000 in the period.
2 : What would it's gross profit have been?
Answers can be found in the appendix on page 424
P 232
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