A business has compiled the following information for the year ended 31 December 20X2:
| $ | |
| Opening inventory | 96,550 |
| Purchases | 247,250 |
| Closing inventory | 105,675 |
The gross profit as a percentage of sales is always 20%
Based on these figures, what is the sales revenue for the year?
Answer
| $ | |
| Opening inventory | 96,550 |
| Purchases | 247,250 |
| Closing inventory | (105,675) |
| Cost of sales | 238,125 |
Sales revenue = 238,125 / 0.8 = 238,125 x 100/80 = $297,656
More Explanation
Gross Profit = sale – cost of sale
Markup on Cost 20%
Markup = ( sale – cost) / cost = 20%
- gross profit = cost x 20%
- Sale = cost + cost x 20% = 120 % x cost
Gross profit = sale – cost = cost + cost x 20% – cost = cost x 20%
Margin 20% (gross profit percentage on sales revenue of 20%)
Margin = (sale –cost)/sale = 20%
- gross profit = sale x 20%
- Gross profit = sale – cost => sale x 20% = sale – cost , so Sale
= cost / 0.8 = cost / (80/100) = cost x 100 / 80