Chapter 8.8, Problem 77CCR

(a)

To determine

Find the profit for the month.

Answer to Problem 77CCR

Total profit is $\text{ - \$ 753}$

Explanation of Solution

Given:

The formula $\text{P}=\text{I - E}$ is used to find the profit P when Income I and expenses E are known. One month a small business has an income of $19,592 and expenses of $20,345.

What is the profit for the month?

Concept Used:

The formula $\text{P}=\text{I - E}$ is used to find the profit P when Income I and expenses E are known. One month a small business has an income of $19,592 and expenses of $20,345.

Calculation:

The formula $\text{P}=\text{I - E}$ is used to find the profit P when Income I and expenses E are known. Given: I = $19,592 and E = $20,345.

Profit $\text{P}=\text{I - E = \$ 19592 - \$ 20345= - \$ 753}$

Thus, total profit is $\text{ - \$ 753}$ .

(b)

To determine

Find the meaning of negative profit.

Answer to Problem 77CCR

The negative profit means the business is running with loss.

Explanation of Solution

Given:

The formula $\text{P}=\text{I - E}$ is used to find the profit P when Income I and expenses E are known. One month a small business has an income of $19,592 and expenses of $20,345.

What does a negative profit mean?

Concept Used:

Gross profit margin can turn negative when the costs of production exceed total sales. A negative margin can be an indication of a company's inability to control costs. 

A negative gross profit means that the sales are not enough to cover the cost incurred to manufacture the goods or provide the services.

Simply, the negative profit means the business is running with loss.