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November 23, 2022 at 10:42 am
how the answer be 31.2 when the question said the gross profit margin is 20% and not the net profit margin
August 28, 2022 at 4:14 pm
Messed up the easy 1. Question 4, got the rest correct. This is pure example of how an examiner can fool you with basic English, I got trapped. Read the questions properly before answering guys.
May 1, 2022 at 4:13 am
Sir, I also got wrong for Q.1, very confused about the % of cost-plus, mark up, and gross profit margin, can provide some hits for easy identify the equation?
And for the absorption costing, fixed overhead costs should be allocated to a product whether or not it was sold in the period, but why the overhead cost $5 is excluded here?
John Moffat says
May 1, 2022 at 9:54 am
The overhead cost has not been excluded. The total cost is 10 + 8 + 3 + 5 = $26.
The gross profit margin is the profit as a % of the selling price. So for every $100 selling price, the profit is $20 and therefore the cost is $80. Putting it the other way round, for every $80 cost, the selling price is $100. Therefore for a cost of $26, the selling price must be 100/80 x $26.
(Mark-up is the profit as a % of the cost. You can find more examples of both the gross margin and the mark-up in the Paper FA lectures on “mark-ups and margins”)
April 30, 2021 at 11:16 am
I confused on Q3. Why MR=500-0.006X how to get the 0.006?
April 30, 2021 at 3:09 pm
b = 30/1000 = 0.003
The formula provided for the marginal revenue contains 2b, and 2 x 0.003 = 0.006
Did you watch the free lectures before attempting the test?
October 27, 2020 at 7:14 pm
I am a bit confused here. Price demand equation is P= a-bQ . Therefore the answer should be P=75-.0025Q and I have got it wrong. Could you please explain.
October 28, 2020 at 3:28 pm
Ya same here mitiksha.i also have same doubt.
October 28, 2020 at 3:35 pm
Ok I got it. This is my solution.
P = a – bq
So here I have to find first b= change in price/ change in qty
5/2000 = 0.0025
Next step is I have to find a so
25 = a-(0.0025*20000)
So therefore answer is p=75-0.0025q.
I hope u understand
October 29, 2020 at 9:15 am
August 10, 2020 at 11:47 am
this question are really good
January 10, 2020 at 12:36 pm
I just want to understand something. there are three ways
1. 100/80 * 26
2. 120/100 * 26
like on absorption costing question about selling price,i got it wrong coz i am always confused when it comes to the three ways. like the way the questions are asked,how best can l know which one to use.?
January 10, 2020 at 3:18 pm
Unless the question specifically says differently, a profit margin is the profit as a % of the sales. A mark-up is the profit as a % of the cost.
(It may help you to watch the Paper FA lectures on mark-ups and margins.)
January 13, 2020 at 11:54 am
November 8, 2020 at 5:31 pm
Thank you ! you explained it so well in that lecture
November 27, 2020 at 7:33 pm
i hope you are well. One Qs; i do not understand why you did 100/80*26 Can you please explain?
November 28, 2020 at 9:50 am
If the profit is 20% of the sales then the cost must be 80% of the sales. Therefore the sales must be the cost divided by 80% (which is the same as multiplying by 100/80).
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