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march june 2018, question 4, part (c), in the last sentence, it says Knott Co makes a 10% profit margin on all of its sales of aluminium. usually a company charges 10% based on it’s sales value therefore shouldn’t the profit be 77 million / 110 x 10 = 7million ?
No – margin means that the % is of the sales value. It is “mark-up (on cost)” which would make sales 110% of cost.