Theory question 108
Business CalculationsThe following information was extracted from the books of XYZ Ventures as at 31st June 2023.
Le
Opening stock 200,000
Closing stock 100,000
Salaries and wages 120,000
Purchases 900,000
Shop rent 150,000
30% profit was made on cost of goods sold.
You are required to calculate: (a) cost of goods sold; (b) gross profit; (c) total sales; (d) net profit; (e) rate of turnover.
Show the model answer
(a) Cost of goods sold = 200,000 + 900,000 − 100,000 = Le1,000,000
(b) Gross profit = 30% × 1,000,000 = Le300,000
(c) Sales = cost of goods sold + gross profit = 1,000,000 + 300,000 = Le1,300,000
(d) Net profit = 300,000 − (120,000 + 150,000) = Le30,000
(e) Average stock = (200,000 + 100,000) ÷ 2 = Le150,000
Rate of turnover = 1,000,000 ÷ 150,000 = 6.67 times (about 7 times)
The 30% is on cost (mark-up), so gross profit = 30% of cost of goods sold.