Margin and Markups? Confused.
amybu22
Registered Posts: 12
On the FSTP sample assessment 1 there is a Margin question and I'm not sure how to figure it out?
During the year ended March 20X7, sales of 63,900 were made. The trader operated with a gross sales margin of 25%.
Calculate the cost of goods sold for the year ended 31 March 20X7.
and then
Purchases for the year were 46,795.
Calculate the value of closing inventory.
Not sure why I struggle so much with these kind of questions but if anyone could talk me through them I'd appreciate it as my exam is on Tuesday.
During the year ended March 20X7, sales of 63,900 were made. The trader operated with a gross sales margin of 25%.
Calculate the cost of goods sold for the year ended 31 March 20X7.
and then
Purchases for the year were 46,795.
Calculate the value of closing inventory.
Not sure why I struggle so much with these kind of questions but if anyone could talk me through them I'd appreciate it as my exam is on Tuesday.
0
Comments
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The image above should provide you with a good visual representation of what the first part of the question is about.
Our sales figure of £63,900 is 100%. 25% of our sales is our margin (the difference between cost of sales, and sales). The remaining 75% is our cost of sales figure of £47,925.
To calculate the value of the closing inventory, I think we would first need the value of the opening inventory. In this example, imagine our value of opening inventory was £5,850 (as this is the figure given in Task 2 of Sample Assessment 1 for this unit), and we'll use your purchases figure of £46,795.
The formula for closing inventory is this:
(Opening Inventory + Purchases) - Cost of sales = Closing Inventory
So:
(5850 + 46795) - 47925 = 4720
Hope this helps!0 -
Where did you get the opening inventory from? Can't see that figure anywhere0
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The table highlighted above shows the assets and liabilities as at 1 April 20X6. If the year end is 31 March 20X7, then an inventory figure at the beginning of the year (1 April 20X6) must be your opening inventory.0 -
You're given the inventory figure as at 1 April 20X6 in the opening information before part (a).0
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Okay thanks you've really helped! Can I ask a quick Q, how come on some of the incomplete records accounts when it gives you opening and closing balances I've noticed sometimes it will say the opening bal is a credit, and then same for the closing balance even though it's not always right.0
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How do i calculate the value of sales ?the gross sale margin is 40%. Cogs is 64800 opening-5900,closing 6400,purchase 653000
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