A hospital coffee shop has monthly sales of $26,892. The coffee shop’s monthly expenses are as follows:
Cost of sales = $10,825
Salaries = $8597
FICA = $2150
Supplies = $1975
Utilities = $2345
What is the coffee shop’s profit margin for the month (rounded to the nearest percent)?
Explanation
Answer: C - The coffee shop’s profit margin for the month is 6%, as calculated below:
Gross profit = Monthly sales - Cost of sales = $26,892-$10,825 = $16067
Net profit = Monthly sales - (Cost of sales+Salaries+FICA+Supplies+Utilities) =
$26,892 - ($10,825+$8597+$2150+$1975+$2345) = $1000
Profit margin = Net profit/Revenue = $1000 / 26,892 = 0.037
