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Did my exam today and need help!

kellyprestonkellypreston AAT Student Posts: 18
edited October 2018 in Management Accounting: Decisions and Control
I got completely thrown off a question when I needed to calculate sales from the following information:
Inventory holding period
Inventory
Gross profit margin
Net assets

Can someone please explain/provide a formula I would use to calculate sales based on this?I know you can calculate cost of sales from inventory and inventory holding period but then I got completely lost.

Can someone also tell me if AAT give you follow through marks? Because I made up a figure for sales so I could answer the other questions
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Comments

  • mergenmergen Just Joined Registered Posts: 90
    Think of Profit and Loss statement and how it looks. What comes first and then work your way down.
    You've got Inventory Holding Period = Inventory/C of Sales x 365. Once you've got Cost of Sales, you can work your way up to Sales.
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  • kellyprestonkellypreston AAT Student Posts: 18
    But how? That’s what I’m stuck on. How do you get from cost of sales back to sales? I know you have gross profit margin but that’s a percentage not a number. Sorry if I’m being stupid here
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  • crispycrispy Trusted Regular SouthamptonRegistered Posts: 452
    Hello,
    Made up example:

    Inventory Holding: 20 Days
    Closing Inventory: £ 10,000
    Gross Profit Margin: 20%

    First work out missing pruchases figure: £ 10,000/20 Days * 365 Days = £ 182,500
    Then Add Gross Margin to arrive at Sales £ 182,500 / 0.8 = £ 228,125

    Hope this helps.
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  • fournaanjezfournaanjez Registered Posts: 32
    Re-arrange inventory holding period to find COS.

    Then if you know the gross profit margin is, for example, 20% you can find sales by multiplying COS by what you want by what you've got ie 100/80. This will give you a sales figure.

    With regards to the follow through marks, I have no idea sorry. I should imagine if it is a human marked part of the exam that there would be, but can't give you any guarantee.
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  • kellyprestonkellypreston AAT Student Posts: 18
    I see! Thanks everyone, I will now know for next time :)
    fournaanjez
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  • mergenmergen Just Joined Registered Posts: 90
    @kellypreston sorry was rushing trying to type and miss read your post. I read it as Gross Profit and didnt see margin. What the guys above have said.
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  • charlotte1234charlotte1234 Registered Posts: 8
    I'm so glad i'm not the only one who didn't get this question. I can't remember how I answered but this question could be the difference between me passing or failing.....I should get my result tomorrow but I will keep you answers in mind if I need to retake and definitely prepare for this!
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  • TarynPitchforkTarynPitchfork Registered Posts: 21
    I'm having the same issue having taken my exam yesterday, do you know if AAT gave you any marks for this even though the sales revenue figure was incorrect but calculations were good correctly?

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