Adodo Enterprises and Loss Account (Extract) ₦ ₦ Opening stock 5,000 Sales 100,000 Purchases ? ? Less closing stock 5,600 Cost of goods sold ? Gross profit ...
Question 1 Report
| Adodo Enterprises and Loss Account (Extract) | |||
| ₦ | ₦ | ||
| Opening stock | 5,000 | Sales | 100,000 |
| Purchases | ? | ||
| ? | |||
| Less closing stock | 5,600 | ||
| Cost of goods sold | ? | ||
| Gross profit | ? | ||
| 100,000 | 100,000 | ||
If the gross profit margin is 10% what is the value of the cost of goods sold?
Answer Details
The gross profit margin is the percentage of revenue that exceeds the cost of goods sold. It can be calculated as follows:
Gross profit margin = (Gross profit / Sales) x 100%
We are given the value of the gross profit margin as 10%. We can use this information along with the value of sales to calculate the gross profit. Then we can subtract the gross profit from the cost of goods sold to find its value.
Let's first calculate the gross profit:
Gross profit margin = (Gross profit / Sales) x 100%
10% = (Gross profit / ₦100,000) x 100%
Gross profit = (10% / 100%) x ₦100,000
Gross profit = ₦10,000
Now we can use the formula to find the value of cost of goods sold:
Cost of goods sold = Sales - Gross profit
Cost of goods sold = ₦100,000 - ₦10,000
Cost of goods sold = ₦90,000
Therefore, the value of the cost of goods sold is ₦90,000.
The correct answer to the question is option B.
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