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August 29, 2022 at 3:37 pm
For Q5 I did the following calculations:
Sales revenue $600 × 5000 = $3,000,000
Profit required 20/120 × $3,000,000 = $500,000
Total cost $3,000,000 – $500,000 = $2,500,000
Target cost p/unit $2,500,000 / 5000 = $500
Cost gap $520 – $500 = $20
I got the same answer, would my calculations be OK for the exam?
John Moffat says
August 29, 2022 at 5:32 pm
Yes. (and nobody looks at your workings anyway for the section A and B questions 🙂 )
August 4, 2022 at 1:15 pm
Thank you John I got 100%
August 4, 2022 at 3:11 pm
July 26, 2022 at 1:09 pm
Dear John, i still have some confuse about the Q2, why we can not 300*1.2=250?
So if I do this, does that mean that 250 is the rate of return that it expects to get?
July 26, 2022 at 3:53 pm
250 is certainly not a rate of return (rates of returns are %’ages!).
They require a return on investment of 20% and therefore they want a profit of 20% x $1,250,000.
What you are doing would be correct if they wanted a profit on cost (i.e. a profit margin) of 20%.
It would seem you did not watch my free lectures before attempting the test because this example is similar to example 2 in my lecture.
June 22, 2022 at 3:52 pm
Thanks John. I sincerely appreciate.
June 22, 2022 at 5:16 pm
Thank you for your comment 🙂
June 16, 2022 at 8:13 am
Thanks John, your explanation was explicit as I scored 100% on the MCQ test.
April 27, 2022 at 2:28 pm
I got full in this quiz, thanks to John’s very thorough interpretations. 🙂
April 27, 2022 at 4:07 pm
Well done 🙂
April 2, 2022 at 12:14 pm
Its all good for me on this chapter
February 13, 2022 at 9:58 am
thank you Mr. I get 100%… it was really very clear and digestible lecture
November 23, 2021 at 8:48 pm
I was very confused about the 100. Still a little unsure
November 29, 2021 at 5:26 pm
Which question are you referring to?
If it is Question 5, since the profit is 20% of the cost the selling price must be 100% + 20% = 120% of the cost.
Therefore the target cost must be 600/120% = $500.
January 20, 2022 at 4:47 am
thank you so much lecture for the test
January 20, 2022 at 7:51 am
You are welcome.
August 10, 2021 at 2:26 am
It took my brain a while to figure out that reverse mathematical operation! I was only convinced when I realized that 20% of 500 (the unknown cost price) is 100 and when added gives us that 600 sale price. Defeated by math…
Posted for anyone else coming here to figure it out.
September 30, 2021 at 6:25 am
For sure. I think the vocabulary is just as important!
July 9, 2021 at 1:25 pm
Thanks for the lecture and the questions
June 16, 2021 at 1:58 am
Oh yeah! ?%
April 13, 2021 at 9:30 am
This was perfect am probably progressing i got 100%.despite being average in chapt.1 Thank you Open tuition.
March 17, 2021 at 5:04 am
Hi, I’m confused by question 5..
Is it possible you can do a breakdown?
March 17, 2021 at 7:33 am
The selling price is $600.
For the profit to be 20% of the cost, the cost needs to be 100/120 x $600 = $500, and this is therefore the target cost.
The estimated cost is actually $520, and therefore the cost gap is 520 – 500 = $20.
February 9, 2021 at 2:19 pm
I hope am making a progress
January 21, 2021 at 3:55 am
Thank youu for the quiz . I got 8% . My mistake at Q5 , i think the markup is markup cost ??
January 21, 2021 at 8:47 am
The mark-up is the profit as a % of the cost.
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