AP2 Sample Exam 2 on AAT Website

Hi, can someone please explain the following question and answer on the AAT Sample Exam (2)?

''SRV at 20% applies to all sales.
-The trader sells an item to a customer for £405 including VAT.
-There were no discounts.

Calculate the original cost of the item to the trader, excluding VAT.''

Answer - £250.

I thought that the answer would be £337.50? (£405 / 1.2)

Comments

  • LauraHelpsLauraHelps Posts: 6Registered, Tutor
    Hi

    This question leads on from the one above it where Mark up is 35%
    So first you correctly worked out the net sales proceeds are 337.50
    But you are asked to work out the original cost of the item, so need to use the mark up method, divide your 337.50 by 135% and times by 100% to get the original cost

    Sales 135% 337.50
    Mark up 35% 87.50
    Cost 100% 250.00

    I hope that helps
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