Task 7 (I think)
EmilyRose
AAT Student, AATQB Posts: 11
How would you work out sales revenue from the below information.
Inventory holding days 45 days
Inventory £252000
Gross profit margin is 20%
Work out
Sales revenue
Cos
Gross profit
I did it one way, hummed and harred and changed it at the last minute. Just wanted to know if what I did was right or wrong!
TIA
Inventory holding days 45 days
Inventory £252000
Gross profit margin is 20%
Work out
Sales revenue
Cos
Gross profit
I did it one way, hummed and harred and changed it at the last minute. Just wanted to know if what I did was right or wrong!
TIA
0
Best Answer

Unless I'm mistaken Sunflower, the inventory holding day calculation involves COS, not sales. So the £2,044,000 figure you calculated is not the sales revenue figure but the COS.
Given that gross profit is 20%, sales revenue must be 100% and COS must be 80%. To find the sales revenue, we need to divide COS by 0.8, which gives us £2,555,000.
Finally, we find 20% of the sales revenue to get the gross profit, which is £511,000.
Sales revenue  £2,555,000
COS  £2,044,000
Gross profit  £511,000Matthew Dearlove MAAT
Currently on CIMA Management Level. Passed P2, F2 and E2. Preparing for November 19 MCS.5
Answers

Inventory is £252000 and inventory days is 45  from this information we can calculate the sales figure: 45 days out of 365 (a full year) so 252000 divided by 45 multiplied by 365 gives £2044000 sales.
We are given the gross profit margin which is a percentage of sales 20% of £2044000 = £408,800, therefore the cost of sales = £1635200 (80%).
Let me know if you got the same figures.0 
Thank you both for your responses. In the exam I first did it how sunflower explained and changed it last minute to Cheesepeasys solution. Fingers crossed it’s correct as there was a lot of other calculations based on the solution of this one.
Thanks again
Emily0
Categories
 All Categories
 1.2K Books to buy and sell
 2.3K General discussion
 18.9K For AAT students
 234 NEW! Qualifications 2022
 133 General Qualifications 2022 discussion
 7 AAT Level 2 Certificate in Accounting
 31 AAT Level 3 Diploma in Accounting
 55 AAT Level 4 Diploma in Professional Accounting
 8.9K For accounting professionals
 23 coronavirus (Covid19)
 272 VAT
 91 Software
 272 Tax
 135 Bookkeeping
 7.3K General accounting discussion
 201 AAT member discussion (AATQB, MAAT, FMAAT and AAT Licensed Accountants and Bookkeepers)
 3.8K For everyone
 39 AAT news and announcements
 352 Feedback for AAT
 2.8K Chat and offtopic discussion
 586 Job postings
 17 Who can benefit from AAT?
 36 Where can AAT take me?
 44 Getting started with AAT
 26 Finding an AAT training provider
 47 Distance learning and other ways to study AAT
 25 Apprenticeships
 65 AAT membership