Accounting Multiple Choice Question – 6 April 2020

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

Accounting

Catherine O’Byrne‘s trade is seasonal.

Her monthly sales are 50% higher in the three summer months than in the other nine months of the year. She earns a gross margin of 25% in the summer months and 20% during the rest of the year.

If her total sales for the year ended 30 April were £283,500, her cost of sales for the same period was?

Select ONE answer:

  1. £212,625
  2. £222,075
  3. £223,256
  4. £226,800

 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not correct
  2. Correct
  3. Not correct
  4. Not correct

Answer 2 analysis:

  • Let sales in the low season = X
  • Therefore, Sales in the high season = 1.5X
  • Total sales = £283,500 = (9 X) + (3 * 1.5X) = 13.5X
  • Therefore X = £283,500 / 13.5 = £21,000
  • Sales in 9 off-peak months = 9 * £21,000 = £189,000
  • Sales in 3 summer months = 3 * £21,000 * 1.5 = £94,500
  • 3 months – 9 months = Total Sales: £94,500 + £189,000 = £283,500
  • Gross Profit Margin: 25% – 20%
  • Gross Profit (sales * gross profit margin: £23,625 +£37,800
  • Cost of Sales (sales – gross profit): £70,875 +£151,200 = £222,075

 

 

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Author: stuart001uk2014

Referral marketing, business, economics and accounting s​pecialist & corporate mentor

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