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Mark-up and Margins
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Hello, In this lecture, you mention”I dont care the method you use to get the numbers”"” What other methods can I use to work this out. Thank You
Some people use algebra, some people set up a cost structure.
could anyone help me with this question from BPP its as follow
Bob is a sole trader.He has calculated a cost of sales figure for the year, which is $ 342,000.Bob received a payment of $8,030 into the business bank account for goods sold on a special deal to Harry and this amount has been included within sales.The figure of $ 8,030 was calculated by adding a mark up of 10% to the cost of the goods. His gross profit percentage on all other goods sold was 20% of sales.
What is the total figure of sales for the year?
.A) $ 401,640
B) $ 402,370
C) $ 418,375
D) $ 426,405
The answer is D
Please help me out
8,030 was a special deal. 8,030 is the selling price and there is a mark-up of 10%.
So the cost of these was 8,030 / 1.10 = 7,300
The total cost of sales was 342,000, but this includes the 7,300 above. So the cost of other goods was 342,000 – 7,300 = 334,700.
These was sold at a gross margin of 20% and so the sales value was 334,700 / 0.8 = 428,375.
Add the special sales to this: 418,375 + 8,030 = 426,405
Could someone explain no 1 test
@zinnat10,
open inventory 318000
+ purchases 412000
- cogs 459000 ( cogs=612000-0.25*612000)
closing inventory 214000
=> loss in inventory is 57000 (318000+412000-459000-214000)
hope that helps
can someone help me work Ques 1 and 5
Thanks
I have no idea how to do number 6
Please help!!
@nhs14, The cost of sales at the moment is 40,000 + 60,000 – 50,000 = 50,000.
Sale prices are 2 times the cost, and so either sales should be 100,000 (2 x 50,000), or cost of sales should be 47,500 (95,000 / 2 ).
Choice 1 would mean that the sales would have been 100,000, so that is correct.
Choice 3 would mean that the cost of sales would be 47,500 so that is correct.
Neither of the other two choices would work.
@devilmisa very helpful
In the test, question 3 why is the answer not B instead of D and question 4, A instead of C since you taught that lower inventory implies lower profits and higher inventory implies higher profits.
@williamansah, For question 3:
Firstly, revenue was understated by 10,000.
This means that the correct revenue should be 80000 + 10000 = 90000.
It also means the profit would be 20000 + 10000 = 30000
Secondly, closing inventory was overstated by 5000. Reducing the closing inventory will reduce the profit, so this would make the profit 30000 – 5000 = 25000
So, the correct gross profit percentage is 25000 / 90000 = 27.8%
For question 4:
If sales are 193200, the cost of sales is 100/142 x 193200 = 136056.
Since inventory fell by 13200, this means that 13200 of the sales came from inventory and only the remainder needed purchasing.
So, the purchases are 136056 – 13200 = 122856
THANK YOU open tution bpp+open tution best combination
thanks for all
Thankyou so much bro for Reply and Salution !!
Silver Co made sales of $193200 during the year ended 31 August X1.Inventery decreased by $13200 over the year and all sales were made at a mark up of 42%.
What was the cost of purchases During the year, to the nearest $1000?
A) $ 149000
B) $ 136000
C) $ 123000
D) $ 109000
can any one help me with this question
@mohammadbangash,
The sales made on 42% above from cost
thats mean sales itself is 142 %
co we fine find cost because cost always be equal to 100 %
Cost of good sold = 193200 * 100 / 142
cost of good sold = 136056 ( round off)
cost of good purchase = cost of good sold – decrease in inventory
cost of good purchase = 136056 – 13200
cost of good purchase = 122856
have to give ans in neares $ 1000 so 122856 will become 123000
answer is C
@devilmisa, Thanks!! Really Helpfull Answer!!
Could anyone help with Question 3 from Course Notes, please?
The draft accounts of Anthea Co. for the year ended 31 December 20X9 include the following:
Revenue $80,000
Gross profit $20,000
It was subsequently discovered that revenue had been understated by $10,000 and closing inventory overstated by $5,000. After correction of these errors the gross progit percentage will be:
A. 33,3%
B. 16,7%
C. 31,3%
D. 27,8%
As for my considerations the answer should be B. 16,7%:
Corrected revenue should be: $80,000 + $10,000 = $90,000 (revenue is higher then we received from draft accounts).
Corrected gross profit should be: $20,000 – $5,000 = $15,000 (closing inventory should be smaller -> so COGS should be higher -> gross profit should be smaller).
Gross profit percentage: $15,000 / $90,000 = 16,7%.
But the answer in Course Notes shows us D…
@sangria9,
80+the understated 10=90 Sales 90
60 (80 -20 )+ the overstated closing inventory 5=65 less: cost of sales 65
Profit 25
Profit 25/sales 90=27.8% The answer should be D
3(B) Gross Profit is shown incorrectly.
It should be COST / 0.75 = SALES
ergo:
X/0.75 = X
where X = SALES
@fabiangrey, I think you mean example 2(B). The lecture is correct and shows that cost/0.75 = sales.
(to write x/0.75 = x does not make any sense)
Good Lecture, very clear! Thank You)
Good afternoon, Please, can someone kindly send me the workings for “QuestionS 2,3 – Test for chapter 18 – Pg 121″? In advance, thank you.
@amr1974,
Question 2:
Initial figure for inventory on 4 June 2008: $836,200. This should be corrected with operations that occured between 31 May and 4 June:
($8,600) – purchases of goods: on 31 May 2008 this wasn’t in inventory;
$9,800 – sales of goods: $14,000 * 70% = $9,800: on 31 May 2008 this amount was in inventory;
$700 – goods returned by X to supplier: on 31 May 2008 this was in inventory.
Adjusted figure in the financial statement for inventories at 31 May 2008:
$836,200 – $8,600 + $9,800 + $700 = $838,100 (answer A.)
I can not see any video below “NEW!!” Could you please help?
keep up the good work.
on the answer sheet for question 1-6 i am not seeing any work out answer can somebody please help me.
Another way to work it out is to use the following process :-
Margin Mark-up
% %
Sales 100 125
Less Cost of Sales 75 100
____ ____
Gross Profit 25 25
@ilfalz, Oh dear!
@ilfalz, whilst you’re correct that that is an alternative way of doing markup, margin; I personally found the algebraic explanation using “x” a lot more simplified and faster. So, thank you opentuition
how ca u add 1 to 33(1/3) in markup ,,,,, n get your cost
Sorry, correct figure is $418,375 (instead of $427,500)
$342,000 includes $7,300 (8,030/110%) of special order.
Total sales for the year $426,405 includes two points:
1) 7,300*110% = $8,030 (mark-up 10%)
+
2) (342,000 – 7,300) / 80% = $418,375 (margin 20%)