(a) What is turnover? (b) The following information relates to Mrs. Lulu, a trader. Goods selling price N cost price N selling expenses N Buckets 4,000 3,50...
Question 1 Report
(a) What is turnover?
(b) The following information relates to Mrs. Lulu, a trader.
| Goods | selling price N |
cost price N |
selling expenses N |
| Buckets | 4,000 | 3,500 | 400 |
| Boxes | 5,000 | 4,000 | 250 |
| Bournvita | 6,000 | 5,500 | 300 |
| Lace material | 12,000 | 10,500 | 1,000 |
(i) Calculate the gross profit percentage on each item. (ii) Calculate the net profit on each item.
Answer Details
(a) What is turnover?
Turnover is the total value of the net sales (goods sold to customers) made by a business over a given trading period. It is the sales figure after deducting returns inwards, and it is used to measure the volume of business done.
(b) Mrs. Lulu's trading items
| Goods | Selling price (N) | Cost price (N) | Selling expenses (N) |
|---|---|---|---|
| Buckets | 4,000 | 3,500 | 400 |
| Boxes | 5,000 | 4,000 | 250 |
| Bournvita | 6,000 | 5,500 | 300 |
| Lace material | 12,000 | 10,500 | 1,000 |
(i) Gross profit percentage on each item
Gross profit = Selling price - Cost price. The gross profit percentage is expressed on cost price (mark-up):
\[ \text{GP \%} = \frac{\text{Gross profit}}{\text{Cost price}} \times 100 \]
| Goods | Gross profit (N) | Working | GP % (on cost) |
|---|---|---|---|
| Buckets | 500 | (500 / 3,500) x 100 | 14.29% |
| Boxes | 1,000 | (1,000 / 4,000) x 100 | 25.00% |
| Bournvita | 500 | (500 / 5,500) x 100 | 9.09% |
| Lace material | 1,500 | (1,500 / 10,500) x 100 | 14.29% |
(ii) Net profit on each item
Net profit = Gross profit - Selling expenses.
| Goods | Gross profit (N) | Selling expenses (N) | Net profit (N) |
|---|---|---|---|
| Buckets | 500 | 400 | 100 |
| Boxes | 1,000 | 250 | 750 |
| Bournvita | 500 | 300 | 200 |
| Lace material | 1,500 | 1,000 | 500 |
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