CPIM Practice Exam

What is the net profit when current throughput is $3 million and operating expenses are $1 million?

1. $1 million

2. $2 million

3. $3 million

4. $4 million

The correct answer is: $2 million

Net profit is calculated by taking the throughput and subtracting the operating expenses. Throughput represents the revenue generated from sales, while operating expenses encompass all costs necessary to run the business, excluding the cost of goods sold. In this scenario, the throughput is $3 million, and the operating expenses are $1 million. To find the net profit, you would perform the calculation: Net Profit = Throughput - Operating Expenses Net Profit = $3 million - $1 million Net Profit = $2 million Therefore, the correct answer is that the net profit is $2 million. This amount represents what remains after covering all operating costs, indicating the profitability of the operations given the current throughput and expenses.