why we took 30% of profit instead of 8$ ? profit and cost both should be added to calculate revenue so, why examiner took 30% of 8$ to calculate revenue ?
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and why took 40% profit on 5$ to calculate revenue on gifts ?
9y ago#2The examiner has not calculated the revenue as 30% at all.
The revenue from food is $8 (from the question).
Since the profit is 30% they must have costs of 70% of $8 = $5.60.
So to get the cash flow you have the choice - either bring in the revenue of $8 as an inflow and the cost of $5.60 as an outflow, or alternatively do what the examiner has done and just bring in the net receipt of $2.40.
The answer will be the same either way.
The same applies to gifts.
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