Jeff has recently started buying and selling commemorative mugs. He buys them for £4 per mug and sells them for £7 each. Since he started trading, he has bought 2,000 and sold 1,800 mugs, all for cash. Which of the following statements is true for the period since trading started?
A) The business has made a profit of £6,000 and has increased its bank balance by £14,000.
B) The business has made a profit of £6,000 and has increased its bank balance by £4,600.
C) The business has made a profit of £5,400 and has increased its bank balance by £4,600.
D) The business has made a profit of £5,400 and has increased its bank balance by £5,400.

Question

Quizplus · Accepted Answer

Jeff's profit is calculated as (Selling price - Cost price) * Number of mugs sold = (£7 - £4) * 1,800 = £5,400. The increase in bank balance is the total sales revenue minus the cost of mugs bought: (1,800 * £7) - (2,000 * £4) = £12,600 - £8,000 = £4,600.

Jeff Has Recently Started Buying and Selling Commemorative Mugs