Sales revenue (video below)

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

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