Registered Posts: 12
Ali buys 120 cans of drinkv for a total of £30 he wants to make a profit of 40% work out the price for which he should sell each can of drink

• New Member RossendaleMAAT, AAT Licensed Accountant Posts: 281
30/120 * 1.4 = Price
• Registered Posts: 24
Remember that if he spent £30 and wants to make 40% profit, he needs to make a total of (30 * 140%) £42.

So if he needs to make £42 and has 120 cans, he can divide 42/120 to get the answer per can.

There are several ways to work this question out, if you can figure out a few different methods then that would tell me you understood it completely.

- Pol
• Trusted Regular SouthamptonRegistered Posts: 456
Hello,

Would you not £ 30/0.6 = £ 50 for the total
So, £ 50 - £ 30 = £ 20 Profit (£ 20 / £ 50 = 40 %)

£ 50 / 120 cans = £ 0.4167 say £ 0.42

• Registered Posts: 24
crispy said:

Hello,
Would you not £ 30/0.6 = £ 50 for the total

???

Why did you divide by 0.6? To get the total (Spend + 40% Profit) you would Multiply by 1.4 or 140% which gives 42.

42 - 30 = £12 Profit

42/120 = £0.35

Something to note: If in the exam you're asked a question like this, your answer is most likely incorrect if you have a long decimal figure (Like £ 0.4167) UNLESS in the question is states how many decimals to place.

• Trusted Regular SouthamptonRegistered Posts: 456
Hi,

Maybe am reading wrong, but as above would not a profit of 12 represent of profit of 28.6 % only (ie. 12 / Selling price of 42). By multiplying by 1.4 I think this would be marking-up by 40 %, not achieving a profit margin of 40 %.

The 0.4167 looks a bit wonky to me too but,
Selling Price 0.42
Cost 0.25 (30/120)
Profit 0.17

0.17 / 0.42 = 40 %

I was bored half asleep at work when writing my answer so who knows
• Registered Posts: 24
crispy said:

Hi,

Maybe am reading wrong, but as above would not a profit of 12 represent of profit of 28.6 % only (ie. 12 / Selling price of 42). By multiplying by 1.4 I think this would be marking-up by 40 %, not achieving a profit margin of 40 %.

The 0.4167 looks a bit wonky to me too but,
Selling Price 0.42
Cost 0.25 (30/120)
Profit 0.17

0.17 / 0.42 = 40 %

I was bored half asleep at work when writing my answer so who knows

The answer is 0.35, don't try to argue with that and accept it because it will make your life so much easier with future questions (Trust me, you will want to argue A LOT when things get more complex).

If the sell price was 0.42 and you sold all the cans you would be making £50.40 which is £20.40 MORE than what he bought them for.

That's making a 68% profit. Not 40%

• Trusted Regular SouthamptonRegistered Posts: 456
Hi,

Thank you for the advice regarding future questions however I finished AAT maybe 10 years ago....

Sales 50.40
COS 30.00
Profit 20.40

Profit Margin = 40 % (20.4 / 50.4)
Mark Up = 60 % ( 30 / 50.4)

Or maybe im going mad ?

Anyway, hope the OP sees our responses and can take something from it. Mark-Up / Margin can get confusing.

• Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,433

The answer is 0.35, don't try to argue with that and accept it because it will make your life so much easier with future questions (Trust me, you will want to argue A LOT when things get more complex).

Wow. I hope this is not how you talk or intend to talk to your clients.

The question is badly worded in the first place. A 40% profit on what?
Both answers could be correct. I actually came to the same conclusion as @crispy initially, but can see the other answer is also valid.
• Registered Posts: 24
I just added 40% on to £30 which gave me £42, £42 / 120 = 0.35
• Registered Posts: 24

Wow. I hope this is not how you talk or intend to talk to your clients.

The question is badly worded in the first place. A 40% profit on what?
Both answers could be correct. I actually came to the same conclusion as @crispy initially, but can see the other answer is also valid.

@MarieNoelle @crispy

I read back what I wrote this morning and yes, that shouldn't have been said and I was being very ignorant.

Please accept my apologies for being rude Crispy, you are right; both answers could be correct.
• Registered Posts: 12
Ok guyyss I already worked it out 10 mins after I posted this lol btw and please don't comment anything else especially you polarisdyas
• Registered Posts: 12
And BTW that's from a bloody workbook
• Registered Posts: 24
Pavan, what was the correct answer and workings in the end?
• Registered Posts: 5
Hi,

I'll try to explain:

First work out what the price of one can is:

so 120 cans = £30, therefore 1 can is 30/120 = £0.25 pounds

So then he wants to make a profit of 40%, so add this to 100% = 140%

So 140/100 x £0.25 = £0.35 - this is the price he should sell each can of drink in order to earn 40% profit

Hope it helps.

• KentRegistered Posts: 41
1. You don't own the comments section.
2. The question is worded poorly. I would guess you have left a part out, otherwise I'm surprised a real textbook would word it like that.

@h0llymay the answer is 35p because 120 cans cost £30 which equals 25p per can. Multiply this by 1.40 to get 35p. Not that anyone would know but the question is asking for a mark up of 40%. If it was asking for a profit margin of 40%, you would divide 25p by 0.60 (100% less 40% profit margin) which is how others got 42p. Questions will usually specify mark up or margin.
• KentRegistered Posts: 41
@pavan_515 I'm perfectly calm and I wasn't commenting for YOUR benefit; someone else asked a question
• Registered Posts: 12
BTW how do u delete this post so no one can comment on it
• Registered Posts: 12
@mike150185 sorry my bad btw stop commenting now
• KentRegistered Posts: 41
OK
• Registered Posts: 24
Pavan is a rather rude person
• Registered Posts: 12
• Registered Posts: 12
*rude*
• Registered Posts: 24
I also like how you've deleted your comments, no one will want to help you out next time if that's the response you give. You're on your own.
• Registered Posts: 24
Frustrated or not, do not lash out at members that are trying to help you and others who are also studying AAT. We're all in the same boat.
• Registered Posts: 12
• Registered Posts: 12
• Trusted Regular Hampshire/Surrey borderModerator, MAAT, AAT Licensed Accountant Posts: 1,433
edited September 2016
pavan_515 said:

@pavan_515