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
Muji
Ask the Tutor ACCA FR
specimen exam paper question 3a
11y ago#1The 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?
Sign into reply to this topic.