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Catt sells goods at a margin of 50%. During the year to 31 March 20X3 the business made purchases
totalling $134,025 and sales totalling $240,000. Inventories in hand at 31 March 20X3, valued at
cost, was $11,385 higher than the corresponding figure at 1 April 20X2.
What was the cost of the goods Catt had drawn out?A $2,640
B $14,590
C $25,410
D $37,360IN the solution they have shown COS as 120000
DOUBTS- shouln’t the COS be since it is on 50% margin 240000/150*100 = 160000 ??
Unless specifically told differently, a margin is a % of sales (and a mark-up is a % of cost).
Therefore the cost of sales is 40% x $240,000 = $120,000.
I do suggest that you watch my free lectures on mark-ups and margins. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.
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