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TOPIC: MANAGEMENT ACCOUNTING PRINCIPLES

1. Calculate the selling price and gross profit rate for each of the following cost and markups:

[tex]\[
\begin{array}{cccc}
\text{Cost Price (K)} & \text{Mark-ups (\%)} & \text{Selling Price (K)} & \text{Gross Profit Rate (\%)} \\
\hline
540 & 20 & & \\
1500 & 20 & & \\
900 & 20 & & \\
1400 & 20 & & \\
1200 & 25 & & \\
\end{array}
\][/tex]

Show clear calculations or working outs here for each of the above (a-e):

(15 marks)



Answer :

GinnyAnswer
Certainly! We will calculate the selling price and gross profit rate for each item using the given cost prices and markups. Here’s the solution detailed for each item:

### a. Cost Price = K 540, Markup = 20%

1. Calculate the Selling Price:
- Selling Price = Cost Price (1 + Markup/100)
- Selling Price = 540 (1 + 20/100)
- Selling Price = 540 1.20
- Selling Price = K 648.0

2. Calculate the Gross Profit:
- Gross Profit = Selling Price - Cost Price
- Gross Profit = 648.0 - 540
- Gross Profit = K 108.0

3. Calculate the Gross Profit Rate:
- Gross Profit Rate = (Gross Profit / Selling Price) 100
- Gross Profit Rate = (108.0 / 648.0) 100
- Gross Profit Rate = 16.67%

### b. Cost Price = K 1500, Markup = 25%

1. Calculate the Selling Price:
- Selling Price = 1500 (1 + 25/100)
- Selling Price = 1500 1.25
- Selling Price = K 1875.0

2. Calculate the Gross Profit:
- Gross Profit = 1875.0 - 1500
- Gross Profit = K 375.0

3. Calculate the Gross Profit Rate:
- Gross Profit Rate = (375.0 / 1875.0) 100
- Gross Profit Rate = 20.0%

### c. Cost Price = K 900, Markup = 15%

1. Calculate the Selling Price:
- Selling Price = 900 (1 + 15/100)
- Selling Price = 900 1.15
- Selling Price = K 1035.0

2. Calculate the Gross Profit:
- Gross Profit = 1035.0 - 900
- Gross Profit = K 135.0

3. Calculate the Gross Profit Rate:
- Gross Profit Rate = (135.0 / 1035.0) 100
- Gross Profit Rate = 13.04%

### d. Cost Price = K 1400, Markup = 10%

1. Calculate the Selling Price:
- Selling Price = 1400 (1 + 10/100)
- Selling Price = 1400 1.10
- Selling Price = K 1540.0

2. Calculate the Gross Profit:
- Gross Profit = 1540.0 - 1400
- Gross Profit = K 140.0

3. Calculate the Gross Profit Rate:
- Gross Profit Rate = (140.0 / 1540.0) 100
- Gross Profit Rate = 9.09%

### e. Cost Price = K 1200, Markup = 25%

1. Calculate the Selling Price:
- Selling Price = 1200 (1 + 25/100)
- Selling Price = 1200 1.25
- Selling Price = K 1500.0

2. Calculate the Gross Profit:
- Gross Profit = 1500 - 1200
- Gross Profit = K 300.0

3. Calculate the Gross Profit Rate:
- Gross Profit Rate = (300.0 / 1500.0) * 100
- Gross Profit Rate = 20.0%

### Summary Table:

\begin{tabular}{cccc}
Cost Price & Markup & Selling Price & Gross Profit Rate \\
K & [tex]$\%$[/tex] & K & [tex]$\%$[/tex] \\
\hline
540 & 20 & 648.0 & 16.67 \\
1500 & 25 & 1875.0 & 20.0 \\
900 & 15 & 1035.0 & 13.04 \\
1400 & 10 & 1540.0 & 9.09 \\
1200 & 25 & 1500.0 & 20.0 \\
\end{tabular}

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