Help needed! Management Accounting Decision and Control- Trade Payables Payment Period

ggp25

Can someone please help on the below?

The company has a trade payables payment period of 70 days, based on average trade payables of £460,274
Prices are set up using a markup on cost of one third,
Selling costs are 4% of sales and admin costs are 3.5% of sales
Net assets are £4,000,000

Can someone confirm how to calculate:
Sales
Cost of Sales
Gross Profit
Selling costs
Admin costs
Net profit

crispy

Hello,

First figure you can calculate is Cost of Sales £ 460,274 / 70 * 365 = 2,400,000

Then use this to complete the other missing figures:

Sales 3,200,000 (2,400,000 + 1/3 Mark up on cost)
Cost of Sales (2,400,000)
Gross Profit 800,000
Selling Costs (128,000)
Admin Costs (112,000)
Net Profit 560,000

Hope this is correct / helpful

Bonnie28

I would first go with what I have been given easily, which is calculating the Payables period

Payables/COS X 365 days = 70 days
Then do the maths to get 2,400,000

Sales are marked up by 1/3

Therefore 1.33*2400000=3192000

GP= 3192000-2400000=792000

Selling costs
4% of 3192000=127680

Admin costs
3.5% of 3192000= 111720

Net profit =792000-127680-111720
= 552600


Please confirm for me on the answers