Carla sells hot coffee, cider and tea from a sidewalk cart near Wall Street in New York City. Last month she sold $4,500 worth of product to 1,000 customers. She spent $800 on buying her beverages in bulk. Her monthly costs are: Utilities = $100, Salary = $2,000, Advertising = $0, Insurance = $0, Interest = $0, Rent (cart) = $600, Depreciation = $0. What is Carla's monthly cost of goods sold?
A) $800
B) $100
C) $450
D) $1,500

Question

Quizplus · Accepted Answer

Carla's monthly cost of goods sold can be calculated as follows:

Total revenue = $4,500 
Cost of goods sold = Total revenue - Gross profit
Gross profit = Total revenue - (Cost of goods sold + Monthly costs)

Monthly costs = Utilities + Salary + Advertising + Insurance + Interest + Rent + Depreciation
Monthly costs = $100 + $2,000 + $0 + $0 + $0 + $600 + $0 = $2,700

Cost of goods sold = $4,500 - ($800 + $2,700) = $1,000
Therefore, Carla's monthly cost of goods sold is $800.

Carla Sells Hot Coffee, Cider and Tea from a Sidewalk