Future Business Leaders of America (FBLA) Marketing Practice Test

What is the gross profit the company earns if it sells 10 whistles, each costing $0.75 to manufacture and selling for $1.25?

1. $10.00

2. $5.00

3. $7.50

4. $12.50

The correct answer is: $5.00

To determine the gross profit from selling the whistles, one must first calculate both the total revenue generated from sales and the total cost incurred to produce the whistles. 1. **Total Revenue**: This is calculated by multiplying the selling price per whistle by the number sold. In this case, if each whistle sells for $1.25 and 10 whistles are sold, the total revenue is: \[ \text{Total Revenue} = \text{Selling Price per Whistle} \times \text{Number of Whistles Sold} = 1.25 \times 10 = 12.50 \] 2. **Total Cost**: This is determined by multiplying the cost to manufacture each whistle by the number sold. Since each whistle costs $0.75 to manufacture, the total cost can be calculated as follows: \[ \text{Total Cost} = \text{Cost per Whistle} \times \text{Number of Whistles Sold} = 0.75 \times 10 = 7.50 \] 3. **Gross Profit**: Gross profit is derived by subtracting the total cost from the total revenue: \[ \text{Gross Profit}