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A sole trader fixes his prices to achieve a gross profit percentage on sales revenue of 40%. All his sales are for cash. He suspects that one of his sales assistants is stealing cash from sales revenue.
His trading account for the month of June 20X3 is as follows:
$
Recorded sales revenue
181,600
Cost of sales
114,000
Gross profit
67,600
Assuming that the cost of sales figure is correct, how much cash could the sales assistant have taken?
A. $5,040
B. $8,400
C. $22,000
D. It is not possible to calculate a figure from this informationCost of sales = $114,000
Therefore sales should be = $114,000 × 100/60 = $190,000
May I know which fomula is related to this question please? Why COS*100/60.
Thank you very much.Since the profit is 40% of the revenue, the costs must be 60% of the revenue.
Therefore the revenue must be the costs / 60% (which is the same as cost x 100/60).
This is all explained in my free lectures on mark-ups and margins. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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