If the total of a business’s sales for the month of May is £300,000 and its gross profit is equal to 25% of its Cost of Sales, then its Cost of Sales for May was ………… ?
Select ONE answer:
- £60,000
- £75,000
- £225,000
- £240,000
Show your workings to arrive at your answer, and explain and justify your reasons:
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This multiple choice question is suitable for Accounting KS5 classes.
The answer is 4
Sales – Cost of Sales = Gross Profit
Sales- Cost of Sales = 25% of the Cost of Sales
£300,000 – Cost of Sales = 25% of the Cost of Sales
£300,000 = Cost of Sales + 25% of the Cost of Sales
£300,000 = 125% of the Cost of Sales = Cost of Sales * 1.25
Cost of Sales = £300,000 / 1.25 = £240,000
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