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I’m confused with the answer (page 209) of question 8b.8 (page 66 in F2 Practice & Revision kit)
The detail explaination which makes me confused is “calculate the gross profit earned using the gross profit margin given ($5,760×40/60 = $3,840)
I don’t know where the number 40/60 comes from?
Could you help me this, please?You do not say which Revision Kit you are using – I think it must be the BPP kit. (Although it also seems that you are using an old version since it is no longer Paper F2 (it is Paper MA) and the question you are referring to is not on Pager 66 of the current edition.
I mention this because appreciate that the syllabus for the exam has changed since last year.However I have found the question you are referring to. The question says that the gross profit margin is 40%. Therefore the profit is 40% of the sales, and so the cost must be 60% of the sales.
So for every $60 of cost there is a profit of $40. So the profit is 40/60 times the cost.
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