DECA Hospitality Services Team Decision Making Practice Exam

If Larry's Pro Shop sold $583,000 in merchandise during the year and had $100,000 left over for taxes, what was the company's cost of merchandise?

1. $183,000

2. $224,000

3. $280,000

4. $324,000

The correct answer is: $224,000

To determine Larry's Pro Shop's cost of merchandise, you need to understand the relationship between sales, cost of goods sold (COGS), and remaining profit for taxes. The sales amount for the merchandise is $583,000. From this, after covering the cost of merchandise, the company is left with $100,000 for taxes. This implies that the amount left after subtracting the cost of merchandise from the sales equals $100,000. The formula that can be derived from this information looks like this: Sales - Cost of Merchandise = Amount Left for Taxes Using this formula, we can rearrange to find the cost of merchandise: Cost of Merchandise = Sales - Amount Left for Taxes Cost of Merchandise = $583,000 - $100,000 Cost of Merchandise = $483,000 However, based on the structure of your question, it appears there's a step missing. To find the total cost of merchandise sold, we should consider what's usually deducted to find profit (including COGS plus any expenses involved). Since the answer given does not align with typical business financial structures, let's correct that observation. It seems you may have arrived at that answer by using an incorrect context or calculation. The accurate statement for this calculation