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Hi John,
I know that that the gross profit margin is gross profit over sales, and am able to get the overall gpm answer, however after many many attempts I still cannot figure out how they have worked out the individual gpm for each part of the breakdown, ie. 40% gross profit margin for household goods at 31 August 20X6 etc.
Please could you help.
Also, in line with these types of questions – apologies I know this is a very silly question, but it’s the difference between the right and wrong answer sometimes. When working out the change of revenue for example between two years, in this paper they have done 94660-82320/82320 to give 15%, however I have seen in different questions where they may do 94660-82330/94660 to give 13%. I just am not sure what method is meant to be used, or which method is meant to be used where.
Thank you very much.
In the notes given in the question, you are told that the revenue for household goods is 38,990 and that the cost of sales of household goods is 23,394.
Therefore the gross profit is 38,990 – 23,394 = 15,596.
So the gross profit margin is 15,596 / 38,990 = 40%With regard to the growth in revenue, we always calculate the increase as a % of the earliest one. (You say you have seen it differently in other questions, but you will have to tell me the question for me to explain why this was the case.)
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