McQueen, Inc. buys premium ice cream at a cost of $3.00 a gallon and sells it for $8 a gallon. Selling, general, and administrative expenses are $1.50 per gallon. Which of the following statements is correct?
A. Gross profit per gallon is $3.50.
B. Gross profit per gallon is $5.00.
C. The difference between the selling price and the cost is recorded in the gross profit account.
D. The difference between the selling price and the cost is recorded in the Net Profit account.
Answer: B
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