Florida General Contractor Practice Exam 2025 - Free Contractor License Practice Questions and Study Guide

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Question: 1 / 400

A company has an income of 200,000. If it wants to achieve a gross profit of 40%, what should be the cost of goods sold?

80,000

100,000

120,000

To determine the correct cost of goods sold (COGS) for a company seeking to achieve a gross profit margin of 40% on an income of $200,000, we start by understanding the components of gross profit.

Gross profit can be defined as the difference between total revenue (income) and the cost of goods sold. If the company aims for a gross profit margin of 40%, this means that the gross profit itself, calculated from the revenue, would be 40% of $200,000.

Calculating that, we get:

Gross Profit = 40% of $200,000 = 0.40 x $200,000 = $80,000.

Since gross profit is derived from the income minus the COGS, we can set up the following equation:

Gross Profit = Income - COGS.

Substituting what we know, we have:

$80,000 = $200,000 - COGS.

Now, rearranging this equation to find the COGS gives us:

COGS = $200,000 - $80,000 = $120,000.

Therefore, to achieve a gross profit of 40% on an income of $200,000, the company's cost of

Florida General Contractor Practice Exam 2025 - Free Contractor License Practice Questions and Study Guide

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