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Hi I have been trying to work out the cost of sales in the mini exercises question 1 & 2
rival achieves gross margin of 15 % closing inventory 30% higher than open inventory
How do I work these out struggling with them.
can you tell me the formula etc, I think its something to do with working out the gross margin in sales. but not sure how to do it.
ThanksI assume that you know the difference between mark-up and margin (aka gross profit)
To solve these mini-exercises you need to go back to the algebra lessons that you may have missed at school!
Try this … let opening inventory be X so therefore closing inventory is 1.3X
And cost of sales, as you (should) know, is calculated as opening inventory + purchases – closing inventory
Can you take it from there?
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