Theory question 105
Business CalculationsCommerce 2 (essay)
(a) What is turnover?
(b) The following information relates to Mrs. Lulu, a trader (₦):
Buckets – selling price 4,000; cost price 3,500; selling expenses 400
Boxes – selling price 5,000; cost price 4,000; selling expenses 250
Bournvita – selling price 6,000; cost price 5,500; selling expenses 300
Lace Materials – selling price 12,000; cost price 10,500; selling expenses 1,000
(i) Calculate the gross profit percentage on each item.
(ii) Calculate the net profit on each item.
Show the model answer
(a) Turnover is the total value of sales (net sales) made by a business in a period.
(b)(i) Gross profit percentage (on selling price): buckets 500 ÷ 4,000 = 12.5%; boxes 1,000 ÷ 5,000 = 20%; Bournvita 500 ÷ 6,000 ≈ 8.3%; lace materials 1,500 ÷ 12,000 = 12.5%. (On cost price: 14.3%, 25%, 9.1%, 14.3%.)
(ii) Net profit = gross profit − selling expenses: buckets 500 − 400 = ₦100; boxes 1,000 − 250 = ₦750; Bournvita 500 − 300 = ₦200; lace materials 1,500 − 1,000 = ₦500.
Gross profit = selling price − cost price; state whether the percentage is on sales or cost.