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Calculate Turnover, Cost of Goods Sold, Average Mark Up, and Gross Profit Margin.

Accounting

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Step-by-step solution

14 steps

Here's the calculation for each part based on the provided information:

  • Purchases: K76,000
  • Sales: K101,500
  • Purchases returns: K500
  • Sales returns: K1,500
  • Opening stock: K6,000
  • Closing stock: K6,500

Part a· 3 steps

Turnover for the year

  1. Identify the formula for Turnover (Net Sales).

    Turnover=Sales−Sales Returns\text{Turnover} = \text{Sales} - \text{Sales Returns}

  2. Substitute the given values.

    Turnover=K101,500−K1,500\text{Turnover} = \text{K}101,500 - \text{K}1,500

  3. Calculate the Turnover.

    Turnover=K100,000\text{Turnover} = \boxed{\textbf{K100,000}}

Part b· 4 steps

Cost of Goods Sold (COGS)

  1. Calculate Net Purchases.

    Net Purchases=Purchases−Purchases Returns\text{Net Purchases} = \text{Purchases} - \text{Purchases Returns} Net Purchases=K76,000−K500=K75,500\text{Net Purchases} = \text{K}76,000 - \text{K}500 = \text{K}75,500

  2. Identify the formula for Cost of Goods Sold.

    COGS=Opening Stock+Net Purchases−Closing Stock\text{COGS} = \text{Opening Stock} + \text{Net Purchases} - \text{Closing Stock}

  3. Substitute the values.

    COGS=K6,000+K75,500−K6,500\text{COGS} = \text{K}6,000 + \text{K}75,500 - \text{K}6,500

  4. Calculate the Cost of Goods Sold.

    COGS=K81,500−K6,500=K75,000\text{COGS} = \text{K}81,500 - \text{K}6,500 = \boxed{\textbf{K75,000}}

Part c· 4 steps

Average mark-up as a percentage of cost

  1. Calculate Gross Profit.

    Gross Profit=Turnover−Cost of Goods Sold\text{Gross Profit} = \text{Turnover} - \text{Cost of Goods Sold} Gross Profit=K100,000−K75,000=K25,000\text{Gross Profit} = \text{K}100,000 - \text{K}75,000 = \text{K}25,000

  2. Identify the formula for Mark-up percentage.

    Mark-up Percentage=(Gross ProfitCost of Goods Sold)×100%\text{Mark-up Percentage} = \left( \frac{\text{Gross Profit}}{\text{Cost of Goods Sold}} \right) \times 100\%

  3. Substitute the values.

    Mark-up Percentage=(K25,000K75,000)×100%\text{Mark-up Percentage} = \left( \frac{\text{K}25,000}{\text{K}75,000} \right) \times 100\%

  4. Calculate the Mark-up percentage.

    Mark-up Percentage=13×100%=33.33%\text{Mark-up Percentage} = \frac{1}{3} \times 100\% = \boxed{\textbf{33.33\%}}

Part d· 3 steps

Gross profit margin (percentage of Sales)

  1. Identify the formula for Gross Profit Margin.

    Gross Profit Margin=(Gross ProfitTurnover)×100%\text{Gross Profit Margin} = \left( \frac{\text{Gross Profit}}{\text{Turnover}} \right) \times 100\%

  2. Substitute the values.

    Gross Profit Margin=(K25,000K100,000)×100%\text{Gross Profit Margin} = \left( \frac{\text{K}25,000}{\text{K}100,000} \right) \times 100\%

  3. Calculate the Gross Profit Margin.

    Gross Profit Margin=14×100%=25%\text{Gross Profit Margin} = \frac{1}{4} \times 100\% = \boxed{\textbf{25\%}}
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