Question

. The accounts of a company show sales of 12,600. The primary cost is 35% of sales and trading
cost accounts for 25% of the gross profit. Gross profit is arrived at by excluding the primary cost
plus the cost of advertising expenses of 1400, director's salary of `650 per annum plus 2% of
annual sales as miscellaneous costs. Find the percentage profit (approx) on a capital investment of
14,000?​

Answer 1

Answer:

Primary Cost:

35% of 12600 = 4410

Miscellaneous costs:

2% of 12600 = 252

Gross Profit = 12600 - 4410 - 1400 - 650 - 252 = 5888

Trading Cost = 0.25 × 5888 = 1472

Hence, Net Profit = 4416

Percentage Profit =441614000

= 31.54%