Accounting for IGCSE & O level - Preparation Of Financial Statements (Section 13 - No. 3)
What is the formula for calculating the Gross Profit if sales is $240,000 and the mark-up is 50%?
$80,000
$120,000
$160,000
$40,000
Explanation
The markup is on cost, so you must determine the cost of goods sold. If sales is 150% of the cost, then cost of goods sold is $240,000/1.5 = $160,000. Therefore gross profit is $240,000-$160,000=$80,000
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