Question

Vince’s Vehicle Repairs has a gross profit margin of 60% and a net profit margin of 22%. Turnover was £180000. Calculate:

Cost of sales

Answer 1

Vince's Vehicle Repairs

The Cost of Sales is:

= $72,000.

Step-by-step explanation:

a) Data and Calculations:

Turnover = $180,000

Gross profit margin = 60%

Net profit margin = 22%

Gross profit margin = Gross profit/Turnover * 100

60% = Gross Profit/$180,000 * 100

Therefore, the Gross Profit = $180,000 * 60%

Gross Profit = $108,000

Cost of sales = Turnover - Gross profit (100% - 60%)

Cost of sales = $180,000 - $108,000

= $72,000

Alternatively, Cost of Sales:

= $180,000 * (100% - 60%)

= $72,000