MDCL mock assessment task 1.6
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Tan
Registered Posts: 1 New contributor 🐸
Hi,
I am struggling with this question. Please can someone explain the calculations on how you work out this question.
I am struggling with this question. Please can someone explain the calculations on how you work out this question.
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Hi Tan
I'll outline the method below I'd attempt the question yourself after the first equation as I think it'll slot into place. If not the method for all section a is below.
Start with the metric you have available.
Inventory holding period = 45 days
Average inventory = £225,000
You can use this is find a Cost of Sales figure
365/45 * 225,000 = 1,825,000
From here it all cascades
You can calculate the Sales using the margin given of 20%
CoS = 0.8 Sales
Sales = 2,281,250
This allows you to calculate the Gross Profit, Selling and admin costs
GP = 2281250-1825000 = 456,250
Selling = 2281250 * 0.02 = 45,625
Admin = 2281250 * 0.035 = 79843.75 Round per instructions = 79844
From there you can get the net Profit
NP = 330,781
Hope this helps
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