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Silver company made sales of $193200 during the year ended 31 august x1. Inventory decreased by 13200 over the year and all sales were made at a mark up of 42%.What was the cost of purchases during the year to the nearset $1000? The answer is 123000 how do you find it?
If there is a mark up of 42%, then for every 100 cost, the profit is 42 and the sales are 142.
So if the sales are 193200 then the cost of sales must be 100/142 x 193200 = 136,056
Since inventory fell by 13,200, the purchases must be 136,056 – 13,200 = 122,856 (or 123,000 to the nearest 1,000)The free lecture on mark-ups and margins may help you!
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