MDCL mock assessment task 1.6

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