Theory question 108
Business CalculationsCommerce 2 (essay, answer five questions only)
The following figures were extracted from the books of Mallama Sefinatu a pure water seller (₦):
Opening stock – 16,000
Purchases – 36,000
Rent – 1,500
Sales – 50,000
Salaries & Wages – 2,400
Closing Stock – 24,000
You are required to calculate;
(a) average stock;
(b) rate of turnover;
(c) gross profit.
Show the model answer
Model answer
(a) Average stock = (16,000 + 24,000) ÷ 2 = ₦20,000.
(b) Cost of goods sold = 16,000 + 36,000 − 24,000 = ₦28,000; rate of turnover = 28,000 ÷ 20,000 = 1.4 times.
(c) Gross profit = 50,000 − 28,000 = ₦22,000.
Explanation
Rent and wages are not needed for gross profit.