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Hello, regarding note#1 the question said the revenue is $16mil, support costs are $1.2 mil. The gross profit is 40% . I know if you ‘re dealing with margin ,cp + profit= 100% and when dealing with markup cp + profit = 140% . In this question how do i know that the $1.2 mil is 60% or 100%?
What I did (which was apparently wrong) was I took the sp of 16mil to be 140% since i know that in cases where cost + profit = selling price, the cost is 100, profit=40 and sp =140. I also took the COSTS of $1.2 mil as 100% but the answer has it as 60% and i do not understand why, can you please explain?Margin / gross profit is a percentage based on selling price. If, as per this question, gross profit is 40%, then selling price is 100%, and we know profit is 40% so cost must be 60%
Have you tried the mini-exercises at the back of the free course notes?
Then you should – it’s not too late!
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