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Dear tutor,
the notes regarding revenue and cost of servicing- i dont understand the relationship of why the service cost is calculated as 100/75 and not 75/100 – assuming that we use the
cost + profit=sp relationship.
if gross margin is 25%
then C+ 25%=100%
which means cost is 75%
so why is the cost not calculated to be 75/100 * 600(2)?
Thanks
MujiThe question states that “the estimated cost TO QUINCY is 600” so the invoiced value at 25% gross margin is 100/75*600*2 is 1,600
Does that make it clearer – it’s a “backwards” working. We know the COST to Quincy so the sales value included in revenue is the grossed up value of the cost, not the grossed down value
Better?
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