Task 7 (I think)
EmilyRose
Posts: 11AAT Student, AATQB
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
Best Answer

Cheesypeesy Posts: 102Unless 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.
Answers
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.
Thanks again
Emily