91Ó°ÊÓ

Gross profit is the difference between the revenue of the company and the cost of goods sold. It's often used to assess how well a corporation manages labor and materials in the manufacturing process.

2017:

$\begin{array}{rcl}\mathrm{Total}\mathrm{cost}& =& \mathrm{Cost}\mathrm{incurred}+\mathrm{Estimated}\mathrm{cost}\mathrm{of}\mathrm{completing}\\ & =& \$400,000+\$600,000\\ & =& \$1,000,000\end{array}$

$\begin{array}{rcl}\mathrm{Percentage}\mathrm{of}\mathrm{completion}& =& \frac{\mathrm{Cost}\mathrm{incurred}}{\mathrm{Total}\mathrm{cost}}×100\\ & =& \frac{\$400,000}{\$1,000,000}×100\\ & =& 40\%\end{array}$

$\begin{array}{rcl}\mathrm{Gross}\mathrm{profit}& =& (\mathrm{Contract}\mathrm{price}-\mathrm{Total}\mathrm{cost})×\mathrm{Percentage}\mathrm{of}\mathrm{completion}\\ & =& (1,600,000-1,000,000)×40\%\\ & =& 600,000×40\%\\ & =& \$240,000\end{array}$

2018:

$\begin{array}{rcl}\mathrm{Total}\mathrm{cost}& =& \mathrm{Cost}\mathrm{incurred}+\mathrm{Estimated}\mathrm{cost}\mathrm{of}\mathrm{completing}\\ & =& \$825,000+\$275,000\\ & =& \$1,100,000\end{array}$

$\begin{array}{rcl}\mathrm{Percentage}\mathrm{of}\mathrm{completion}& =& \frac{\mathrm{Cost}\mathrm{incurred}}{\mathrm{Total}\mathrm{cost}}×100\\ & =& \frac{\$825,000}{\$1,100,000}×100\\ & =& 75\%\end{array}$

$\begin{array}{rcl}\mathrm{Gross}\mathrm{profit}& =& \left[\right(\mathrm{Contract}\mathrm{price}-\mathrm{Total}\mathrm{cost})×\mathrm{Percentage}\mathrm{of}\mathrm{completion}]-Grossprofitin2017\\ & =& \left[\right(1,600,000-1,100,000)×75\%]-\$240,000\\ & =& [\$500,000×75\%]-\$240,000\\ & =& \$135,000\end{array}$

2019:

$\begin{array}{rcl}\mathrm{Gross}\mathrm{profit}& =& \mathrm{Contract}\mathrm{price}-\mathrm{Total}\mathrm{cost}-\mathrm{Gross}\mathrm{profit}\mathrm{in}2017-\mathrm{Gross}\mathrm{profit}\mathrm{in}2018\\ & =& \$1,600,000-\$1,070,000-\$240,000-\$135,000\\ & =& \$155,000\end{array}$