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Greetings sir.
Hope you are in good health.In 26.23, it mentions Sun co. sold goods to its parent company at a price of $40,000. The markup on the sales price was 40%. So I used 40/140 X sales price, to get the profit, to calculate PURP.
But the answer at the back used the margin style x40% , and thus due to this difference I got the answer wrong, although my method was correct.
Here’s what I did:
120,000 + (0.8 x (35,000 – PURP))
PURP = (40/140 x 40,000) x 0.25Please , who is in error and what is the explanation and solution ?
Thankyou
The goods were sold for $40,000
The question specifically says that the profit is 40% on the sales price. Therefore the profit is 40% x $40,000.
Sir , when the word markup is used, does that not indicate – addition to cost. Meaning whatever the cost was , the markup of 40% led to the sales price. The word markup is used.
Cost = x (100%)
Mark up = 40%
Sale = 40,000 (140%)To find the difference/profit would mean to use 40/140 x 40,000
If the question had not used the phrase markup/cost up, then we would have done 40/100.
If nothing else is written then mark-up is the profit as a % of cost.
However this question specifically says that it is a % of selling price.
Thankyou, sir. For people with english as a second language, these types of sentence twists prove to be a ride costing marks. I wonder if those having english as a first language ever trip down as much in ACCA language.
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