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Hi John,
Hope you are doing well. For question 20.6 in the BPP 2019-2020 practice book what would be the calculation behind the figure 187,500 in order to give you inventory lost?
Thanks.
The selling price is the cost plus 50%. So for every $100 cost, the selling price will be $150.
Putting it the other way round, for every $150 selling price the cost will have been $100.Therefore for a selling price of $281,250, the cost will have been 100/150 x 281,250 = $187,500
I do work through very similar examples in my free lectures of mark-ups and margins.
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