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Please help. Am having problems identifying whether this question is markup or margin. A ltd purchase goods from B ltd providing B ltd with a standard gross profit on invoice price of 33 1/3. The stock valuation of A ltd included an amount of 16,000 being goods purchased from B ltd for 18,000.
Read page 48 of the free course notes available on this site
Or, if you really want to go back to basics, check out the John Moffat lecture on this subject in the free F3 course notes
I think i understand the lecture on page 48, but my problem with this question is the use of the word invoice price. If invoice price represent cost then this is a markup question but again the word gross profit is used which makes it appear to be a margin question hence my confusion.
Invoice price is the price on the invoice
It could equally well have been termed ‘transfer price’ or ‘selling price’
Actually, invoice price is the terminology that should be the least confusing!
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