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Hi John,
Im working on question 4 how did they work the cost of sales here…. they got $18000 x 50= $900 000. Im baffled please help.
thanks.
Currently they are only open Monday to Saturday (6 days) and sell $10,000 per day.
So the total sales per year are currently 50 weeks x 6 days x $10,000 = $3,000,000.
The gross profit is currently 70% of sales, so the cost of sales must be 30% of sales.
So the total cost of sales is currently 30% x $3,000,000 = $900,000
Thank you John, this is the way I worked the cost of sales out but they got $18000 where did they randomly get the $18000 from? not sure why im bothered but im just trying to figure out where the $18000 is coming from hehehehe sorry
The fact they the answer writes 18,000 x 50 should have given you the clue 🙂
There are 50 weeks in a year.
The sales per week are 6 days x 10,000 = 60,000.
With a profit of 70%, cost of sales per week = 60,000 x 30% = 18,000.
sorry another question q1 december 2008 paper on the gross profit figure for years 2011 and 2012 i worked this as 40-5 x $248292 = $86902 the answer is $91476 how did they get this figure thought the gross profit is 40% and reduced with the sales price which was 5%?
The gross profit will reduce because the sale price reduces.
At the moment, for every 100 sales, the profit is 40, and therefore the cost is 60.
If sales fall by 95, then costs will still be 60, and so the profit will be 35.
However that is not 35% of sales, it is 35/95 of the sales.(Please do not ask about different questions in the same thread. When it is a different question, please start a new thread.)
They did it in exactly the same way.
If you carry on from my previous reply…..we had sales of 95 and costs of 60, therefore profit of 35.
The next year, sales go down another 5%. 5% x 95 = 4.75.
Finish it off yourself the same way as before – calculate what happens to sales, costs stay at 60, so what happens to profit and what is the %.
Sir, why do we deduct the $1,235,000 with $900,000 instead of the $400,000 for the incremental cost for cost of sales?
We are calculating the extra benefit of opening on Sundays.
The 400,000 is the extra costs there will be of opening on Sundays (before discount).
The current costs (not opening on Sundays) is 900,000.
So in future the total costs will be (400,000 + 900,000) less the 5% discount.
Currently the costs are 900,000 (and no discount)So the extra cost if we open on Sundays is the difference between the two.
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