Mini Excercises – Question 2

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August 1, 2017 at 3:10 pm #399854
Anonymous
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The answer given for mini excercise question no. 2 is 58,333. I think it is not a correct answer.
My answer is 39,000.
Beg Inv + Purchase – CGS = End Inv.
X+400,000-(450,000/1.15)=1.3X
400,000-391,000=13.X-X
9,000=0.3X
X=30,000
End inv. = 1.3 Beg Inv = 30,000X1.3 = 39,000
August 1, 2017 at 7:48 pm #399897
MikeLittle
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X + 400,000 – 1.3X = 450,000 * .15
Revenue was 450,000
Gross profit is 15% * 450,000 = 67,500
Therefore cost of sales is 382,500
X + 400,000 – 1.3X = 382,500
So 17,500 = .3X
And X = 58,333
The question tells you that the 15% is gross margin, not mark-up
OK?
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