Assessment 1 Task 6 Decision &Control
EMMAHUTCHESON
Registered Posts: 4
Can anyone help with how to work out the sales figure from this question please?
0
Answers

Hi @EMMAHUTCHESON ,
It's not the fastest way, but let's try :)
We have been provided with the following information:
Inventory holding period  45 days
Inventory  £225,000
Gross profit margin  20%
The following formula can be used to calculate the missing sales value:
GP%= Gros Profit/sales
Gross Profit = Sales  cost of sales
However, we also do not know the value of the cost of sales (CoS)
To calculate the cost of sales, we can use the following formula
Inventory holding period = (Inventory/Cos of sales)*365
45days=(225,000/cost of sales)*365
45days = 225000*365/Cost of sales
45 Cost of sales = 82,125,000
Costs of sales = 1,825,000
To calculate Sales:
GP% = GP/Sales
GP%= (Sales  costs of sales)/sales
20%=( sales  £1,825,000)/sales
1/5 sales = sales  costs of sales
sales  1/5 sales = costs of sales
5/5 sales  1/5sales = CoS
4/5 sales = CoS
4/5 sales = £1,825,000
Sales= £1,825,000*5/4
sales = £2,281,250
I hope this helps :)
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